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Question: engberg company installs lawn sod in home yards the companys...
Question details
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows: |
Amount | Percent of Sales |
||
Sales | $ | 136,000 | 100% |
Variable expenses | 54,400 | 40% | |
Contribution margin | 81,600 | 60% | |
Fixed expenses | 16,000 | ||
Net operating income | $ | 65,600 | |
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 28% 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 28% increase in sales. |
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