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 $ 96,000 38,400 57,600 45,120 $ 12,480 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 6% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 6% increase in unit 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 $ 96,000 38,400 57,600 45,120 $ 12,480 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 6% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 6% increase in unit sales.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hi,
Please help me answer the remaining parts of Requirements 1 through 3.
Thank you.
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
$ 96,000
38,400
57,600
45,120
$ 12,480
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.
Percent of
Sales
100%
40%
60%
Net operating income
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Using the degree of operating leverage, estimate the impact on net operating income of a 6% increase in unit 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).)
increases
X Answer is not complete.
by
< Required 1
%
Required 3 >
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
$ 96,000
38,400
57,600
45, 120
$ 12,480
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 1 Required 2 Required 3
Sales
Variable expenses
Contribution margin
Complete this question by entering your answers in the tabs below.
Percent of
Sales
Fixed expenses
Net operating income
100%
40%
60%
Construct a new contribution format income statement for the company assuming a 6% increase in unit sales.
Engberg Company
Contribution Income Statement
Amount
3** **
✓ $
> Answer is not complete.
0
0
x
X
X
Percent of
Sales
< Required 2
0
X%
X%
%
Required 3 >
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