Exercise 6-9 (Algo) Compute and Use the Degree of Operating Leverage [LO6-8] 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 $ 82,000 32,800 49,200 37,720 $ 11,480 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 5% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales. Required 1 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.) Degree of operating leverage Required 1 Required 2 > €
Exercise 6-9 (Algo) Compute and Use the Degree of Operating Leverage [LO6-8] 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 $ 82,000 32,800 49,200 37,720 $ 11,480 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 5% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales. Required 1 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.) Degree of operating leverage Required 1 Required 2 > €
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![Exercise 6-9 (Algo) Compute and Use the Degree of Operating Leverage [LO6-8]
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
$ 82,000
32,800
49,200
37,720
$ 11,480
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 5% increase in unit sales.
3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales.
Required 1
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.)
Degree of operating leverage
Required 1
Required 2 >
€](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F38645cca-e606-47fd-b3fc-eaaf6c321248%2Fd152ee6d-1622-44a6-8348-5c7cc4325f00%2Fmzqd6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 6-9 (Algo) Compute and Use the Degree of Operating Leverage [LO6-8]
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
$ 82,000
32,800
49,200
37,720
$ 11,480
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 5% increase in unit sales.
3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales.
Required 1
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.)
Degree of operating leverage
Required 1
Required 2 >
€
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