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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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