ngberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows: Amount Percent of Sales Sales $ 145,000 100 % Variable expenses 58,000 40 % Contribution margin 87,000 60 % Fixed expenses 22,000 Net operating income $ 65,000 Using the degree of operating leverage, estimate the impact on net operating income of a 23% increase in sales. (Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e 0.1234 should be entered as 12.34).)
ngberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows: Amount Percent of Sales Sales $ 145,000 100 % Variable expenses 58,000 40 % Contribution margin 87,000 60 % Fixed expenses 22,000 Net operating income $ 65,000 Using the degree of operating leverage, estimate the impact on net operating income of a 23% increase in sales. (Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e 0.1234 should be entered as 12.34).)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
ngberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows:
| Amount | Percent of Sales | ||||
| Sales | $ | 145,000 | 100 | % | |
| Variable expenses | 58,000 | 40 | % | ||
| Contribution margin | 87,000 | 60 | % | ||
| Fixed expenses | 22,000 | ||||
| Net operating income | $ | 65,000 | |||
Using the degree of operating leverage, estimate the impact on net operating income of a 23% increase in sales. (Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e 0.1234 should be entered as 12.34).)
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Estimated percentage increase in operating income = ( Degree of operating leverage * Percentage increase in sales )
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