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Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows:
|
Amount |
Percent
of Sales |
| Sales |
$125,000 |
100% |
|
| Variable expenses |
50,000 |
40% |
|
| |
| Contribution margin |
75,000 |
60% |
|
| Fixed expenses |
20,000 |
|
| |
|
| Net operating income |
$55,000 |
|
|
| |
|
|
What is the degree of operating leverage?
Using the degree of operating leverage, estimate the impact on net operating income of a 29% increase in sales?
Construct a new contribution format income statement for the company assuming a 29% increase in sales.