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Question: engberg company installs lawn sod in home yards the companys...

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Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows:

Amount Percent
of Sales
  Sales $ 139,000 100%   
  Variable expenses 55,600 40%   
  Contribution margin 83,400 60%   
  Fixed expenses 21,000
  Net operating income $ 62,400

.

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 26% 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 26% increase in sales.

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