Question
In: Accounting
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income...
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows:
| Amount | Percent of Sales |
||
| Sales | $ | 133,000 | 100% |
| Variable expenses | 53,200 | 40% | |
| Contribution margin | 79,800 | 60% | |
| Fixed expenses | 16,000 | ||
| Net operating income | $ | 63,800 | |
Required:
1. Compute the company’s degree of operating leverage. (Round your answer to 2 decimal places.)
2. Using the degree of operating leverage, estimate the impact on net operating income of a 22% increase in sales. (Round your intermediate calculations to 2 decimal places. Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34).)
3. Construct a new contribution format income statement for the company assuming a 22% increase in sales.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income...
Engberg Company installs lawn sod in home yards. The company’s
most recent monthly contribution format income statement
follows:
Amount
Percent
of Sales
Sales
$
145,000
100%
Variable
expenses
58,000
40%
Contribution
margin
87,000
60%
Fixed expenses
15,000
Net operating
income
$
72,000
Required:
1.
Compute the company’s degree of operating leverage.
(Round your answer to 2 decimal places.)
2.
Using the degree of operating leverage, estimate the impact on
net operating income of a...
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income...
Engberg Company installs lawn sod in home yards. The company’s
most recent monthly contribution format income statement
follows:
Amount
Percent
of Sales
Sales
$
133,000
100%
Variable expenses
53,200
40%
Contribution margin
79,800
60%
Fixed expenses
16,000
Net operating income
$
63,800
Construct a new contribution format income statement for the
company assuming a 24% increase in sales.
Engberg Company
Contribution Income Statement
Total
Sales
$
Variable expenses
Contribution margin
Fixed expenses
Net operating income
$
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income...
Engberg Company installs lawn sod in home yards. The company’s
most recent monthly contribution format income statement
follows:
Amount
Percent of Sales
Sales
$
141,000
100
%
Variable expenses
56,400
40
%
Contribution margin
84,600
60
%
Fixed expenses
24,000
Net operating income
$
60,600
Required:
1. What is the company’s degree of operating leverage?
2. Using the degree of operating leverage, estimate the impact
on net operating income of a 26% increase in sales.
3. Construct a new contribution...
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income...
Engberg Company installs lawn sod in home yards. The company’s
most recent monthly contribution format income statement
follows:
1. What is the company’s degree of operating leverage?
2. Using the degree of operating leverage, estimate the impact
on net operating income of a 15% increase in sales.
3. Construct a new contribution format income statement for the
company assuming a 15% increase in sales.
Amount
Percent of Sales
Sales
$
144,000
100
%
Variable expenses
57,600
40
%
Contribution margin...
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income...
Engberg Company installs lawn sod in home yards. The company’s
most recent monthly contribution format income statement
follows:
Amount
Percent of
Sales
Sales
$
80,000
100
%
Variable expenses
32,000
40
%
Contribution margin
48,000
60
%
Fixed expenses
38,000
Net operating income
$
10,000
Construct a new contribution format income statement for the
company assuming a 5% increase in sales.
Engberg Company
Contribution Income Statement
Amount
Percent of Sales
%
%
0
0
%
$0
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income...
Engberg Company installs lawn sod in home yards. The company’s
most recent monthly contribution format income statement follows:
Amount Percent of Sales Sales $ 123,000 100 % Variable expenses
49,200 40 % Contribution margin 73,800 60 % Fixed expenses 19,000
Net operating income $ 54,800 Required: 1. What is the company’s
degree of operating leverage? 2. Using the degree of operating
leverage, estimate the impact on net operating income of a 12%
increase in sales. 3. Construct a new contribution...
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income...
Engberg Company installs lawn sod in home yards. The company’s
most recent monthly contribution format income statement
follows:
Amount
Percent of Sales
Sales
$
133,000
100
%
Variable expenses
53,200
40
%
Contribution margin
79,800
60
%
Fixed expenses
18,000
Net operating income
$
61,800
Required:
1. What is the company’s degree of operating leverage?
2. Using the degree of operating leverage, estimate the impact
on net operating income of a 15% increase in sales.
3. Construct a new contribution...
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income...
Engberg Company installs lawn sod in home yards. The company’s
most recent monthly contribution format income statement
follows:
Amount
Percent of
Sales
Sales
$
80,000
100
%
Variable expenses
32,000
40
%
Contribution margin
48,000
60
%
Fixed expenses
38,000
Net operating income
$
10,000
Required:
1. What is the company’s degree of operating leverage?
2. Using the degree of operating leverage, estimate the impact
on net operating income of a 5% increase in sales.
3. Construct a new contribution...
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income...
Engberg Company installs lawn sod in home yards. The company’s
most recent monthly contribution format income statement
follows:
Amount
Percent of Sales
Sales
$
148,000
100
%
Variable expenses
59,200
40
%
Contribution margin
88,800
60
%
Fixed expenses
18,000
Net operating income
$
70,800
Required:
1. What is the company’s 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...
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income...
Engberg Company installs lawn sod in home yards. The company’s
most recent monthly contribution format income statement follows:
Amount Percent of Sales Sales $ 130,000 100 % Variable expenses
52,000 40 % Contribution margin 78,000 60 % Fixed expenses 18,000
Net operating income $ 60,000 Required: 1. What is the company’s
degree of operating leverage? 2. Using the degree of operating
leverage, estimate the impact on net operating income of a 27%
increase in sales. 3. Construct a new contribution...
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