90.2K
Verified Solution
Link Copied!
Engberg Company installs lawn sod in home yards. The companys 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 companys 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 format income statement for the company assuming a 26% increase in sales.
Answer & Explanation
Solved by verified expert
