Engberg Company installs lawn sod in nome yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 88,000 35,200 52,800 42,240 $ 10,560 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 nome yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 88,000 35,200 52,800 42,240 $ 10,560 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
Related questions
Question
100%
![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%
< Required 1
Required 2 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8aa0e649-7d9d-4eef-b9bf-7f22732d0bcd%2F010e5a80-bb72-4b0e-8d2e-cf9de2266316%2Fiflrsl5_processed.jpeg&w=3840&q=75)
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
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%
< Required 1
Required 2 >
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