Engberg Company installs lawn sod in home yards. The companys most recent monthly contribution format...
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Engberg Company installs lawn sod in home yards. The companys most recent monthly contribution format income statement follows: Amount Percent of Sales Sales $ 90,000 100% Variable expenses 36,000 40 Contribution margin 54,000 60% Fixed expenses 43,200 Net operating income $ 10,800 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 7% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 7% increase in unit sales.
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