Exercise 6-9 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: Amount Percent ofSalesSales$80,000 100%Variable expenses 32,000 40%Contribution margin 48,000 60%Fixed expenses 38,000 Net operating income$10,000 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 sales.3. Construct a new contribution format income statement for the company assuming a 5% increase in sales.
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Exercise 6-9 Compute and Use the Degree of Operating Leverage [LO6-8]Engberg Company installs lawn s...
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