Discuss the accounting principle or concept that is most relevant to this situation. Representational Faithfulness is the reason to account for inventory using the lower of cost or market. Conservatism directs accountants to( A ) is the reason to account for inventory using ( B ) ( C ) directs accountants to report inventory at the most realistic and transparent amount.(A) Consistency principle/ Disclosure principle/ Materiality principle/ Representational faithfulness(B) Average cost/ First in, first out/ Last in, first out/ The lower of cost or market(C) Conservatism/ Consistency/ Disclosure/ Materiality/ Representational faithfulness

Engberg company installs lawn sod in home yards. the company’s most recent monthly contribution format income statement follows: amount percent of sales sales $ 80,000 100% variable expenses 32,000 40% contribution margin 48,000 60% fixed expenses 38,000 net operating income $ 10,000 required: 1. compute the company’s degree of operating leverage. (round your answer to 1 decimal place.) 2. using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in sales. (do not round intermediate calculations.) 3. construct a new contribution format income statement for the company assuming a 5% increase in sales.