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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.

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