Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 80,000 32,000 48,000 38,000 $10,000 Required 1 Percent of Sales 100% 40% 60% Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales. Complete this question by entering your answers in the tabs below. Required 2 Required 3 What is the company's degree of operating leverage? (Round your answer to 1 decimal place.) Degree of operating leverage, Required 1 Required 2 >

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows:
Percent of
Sales
100%
40%
60%
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income
Amount
$ 80,000
32,000
Required:
1. What is the company's degree of operating leverage?
2. Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in unit sales.
3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales.
48,000
38,000
$10,000
Complete this question by entering your answers in the tabs below.
Sales
Variable expenses
Contribution margin
Required 1 Required 2 Required 3
Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in unit sales. (Do not
round intermediate calculations.)
Net operating income
< Required 1
Amount
$ 80,000
32,000
48,000
Fixed expenses
38,000
Net operating income $ 10,000
Required 2
Sales
100%
40%
60%
Required:
1. What is the company's degree of operating leverage?
2. Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in unit sales.
3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales.
Complete this question by entering your answers in the tabs below.
Required 11
Construct a new contribution format income statement for the company assuming a 5% increase in unit sales.
Engberg Company
Contribution Income Statement
Required 3
Required 3 >
Amount Percent of Sales
%
Transcribed Image Text:Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Percent of Sales 100% 40% 60% Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 80,000 32,000 Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales. 48,000 38,000 $10,000 Complete this question by entering your answers in the tabs below. Sales Variable expenses Contribution margin Required 1 Required 2 Required 3 Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in unit sales. (Do not round intermediate calculations.) Net operating income < Required 1 Amount $ 80,000 32,000 48,000 Fixed expenses 38,000 Net operating income $ 10,000 Required 2 Sales 100% 40% 60% Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales. Complete this question by entering your answers in the tabs below. Required 11 Construct a new contribution format income statement for the company assuming a 5% increase in unit sales. Engberg Company Contribution Income Statement Required 3 Required 3 > Amount Percent of Sales %
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows:
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income
Amount
$ 80,000
32,000
48,000
38,000
$10,000
Required 1
Percent of
Sales
100%
40%
60%
Required:
1. What is the company's degree of operating leverage?
2. Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in unit sales.
3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales.
Complete this question by entering your answers in the tabs below.
Required 2 Required 3
What is the company's degree of operating leverage? (Round your answer to 1 decimal place.)
Degree of operating leverage,
Required 2 >
Transcribed Image Text:Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 80,000 32,000 48,000 38,000 $10,000 Required 1 Percent of Sales 100% 40% 60% Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales. Complete this question by entering your answers in the tabs below. Required 2 Required 3 What is the company's degree of operating leverage? (Round your answer to 1 decimal place.) Degree of operating leverage, Required 2 >
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