Park Lane Company installs lawn sod in home yards. The companys most recent monthly contribution format income statement follows:

	Amount			Percent of Sales
Sales	$	134,000		100	%
Variable expenses		53,600		40	%
Contribution margin		80,400		60	%
Fixed expenses		15,000
Net operating income	$	65,400

Required:

1. What is the companys degree of operating leverage?

2. Using the degree of operating leverage, estimate the impact on net operating income of a 17% increase in sales.

3. Construct a new contribution format income statement for the company assuming a 17% increase in sales.

Noreen 5e Rechecks 2018-07-27

Noreen 5e Rechecks 2019-09-24

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