Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows:Percent ofAmountSales$ 134,00053,600Sales100%Variable expenses40%Contribution margin80, 40060%Fixed expenses15,000$ 65,400Net operating incomeRequired: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 12% increase in sales.3. Construct a new contribution format income statement for the company assuming a 12% increase in sales.nces eferencesConstruct a new contribution format income statement for the company assuming a 12% increase in sales.Engberg CompanyContribution Income StatementAmountPercent of Sales%%

We know that, Degree of operating leverage = Contribution Margin / Net operating Income Fixed…

Answered: Engberg Company installs lawn sod in…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 9PB: Fire Company is a service firm with current service revenue of $900,000 and a 40% contribution...

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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 $ 86,000 34,400 51,600 39,560 $ 12,040 Required: 1. What is the company's degree of operating leverage? Required 1 Percent of Sales 100% 40% 60% 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 2 decimal places.)
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Percent of Amount Sales Sales Variable expenses $ 96,000 100% 38,400 40% Contribution margin 57,600 60% Fixed expenses 44,160 Net operating income. $ 13,440 Required: Assessment Tool iFrame 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 7% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 7% increase in unit sales.
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Suburban Landscape provides landscaping design and installation for residential and commercial properties. The company's recent annual contribution format income statement follows: Amount Percent of Sales Sales 123,000 100 Variable expenses 49,200 40 Contribution margin 73,800 60 % Fixed expenses 24,000 Net operating income 49,800 Required: 1. What is the company's degree of operating leverage? %24
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S 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 Amount $ 123,000 49, 200 73,800 Fixed expenses 17,000 Net operating income $ 56,800 Required: 1. What is the company's degree of operating leverage? (Round to two decimal places.) 2. Using the degree of operating leverage, estimate the percentage increase in net operating income if there is a 17% increase in unit sales. (Enter the percentage as a whole number with two decimal places, i.e., 40.25.) 3. Construct a new contribution format income statement for the company assuming a 17% increase in unit sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the company's degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage
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 Required 1 Amount $ 88,000 35, 200 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 6% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 6% increase in unit sales. Required 2 Required 3 52,800 42, 240 $ 10,560 Complete this question by entering your answers in the tabs below. Degree of operating leverage What is the company's degree of operating leverage? Note: Round your answer to 2 decimal places. Percent of Sales 100% 40% 60%
Compute and Use the Degree of Operating Leverage Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution formal income statement follows: 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 sales. 3. Verify your estimate from part (2) above by constructing a new contribution format income statement for the company assuming a 5% increase in sales.
A tile manufacturer has supplied the following data: 1. What is the company's unit contribution margin? $0.86B. $2.35C. $4.10D. $1.75 2. The company's contribution margin ratio is closest to: 42.7%B. 57.3%C. 45.8%D. 21.0% 3. If the company increases its unit sales volume by 3% without increasing its fixed expenses, then total net operating income should be closest to: $459,380B. $453,667C. $13,380D. $482,660
The following income statement applies to Munoz Company for the current year: Income Statement Sales revenue (440 units x $34) Variable cost (440 units x $19) Contribution margin Fixed cost 3 Net income $14,960 (8,360) 6,600 (4,400) $2,200 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Munoz Company will earn if it experiences a 10 percent increase in revenue. The sales price per unit is not affected. c-1. Verify your answer to Requirement b by constructing an income statement based on a 10 percent increase in sales revenue. The sales price is not affected. c-2. Calculate the percentage change in net income for the two income statements. Complete this question by entering your answers in the tabs below. Req A and B Req C1 Req C2 a. Use the contribution margin approach to calculate the magnitude of operating leverage. b.…
The following income statement applies to Finch Company for the current year: Income Statement Sales revenue (480 units × $30) $ 14,400 Variable cost (480 units × $15) (7,200 ) Contribution margin 7,200 Fixed cost (4,000 ) Net income $ 3,200 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Finch

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