Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income...
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Engberg Company installs lawn sod in home yards. The company’smost recent monthly contribution format income statement follows:Amount Percent of Sales Sales $ 130,000 100 % Variable expenses52,000 40 % Contribution margin 78,000 60 % Fixed expenses 18,000Net operating income $ 60,000 Required: 1. What is the company’sdegree of operating leverage? 2. Using the degree of operatingleverage, estimate the impact on net operating income of a 27%increase in sales. 3. Construct a new contribution format incomestatement for the company assuming a 27% increase in sales.
Engberg Company installs lawn sod in home yards. The company’smost recent monthly contribution format income statement follows:Amount Percent of Sales Sales $ 130,000 100 % Variable expenses52,000 40 % Contribution margin 78,000 60 % Fixed expenses 18,000Net operating income $ 60,000 Required: 1. What is the company’sdegree of operating leverage? 2. Using the degree of operatingleverage, estimate the impact on net operating income of a 27%increase in sales. 3. Construct a new contribution format incomestatement for the company assuming a 27% increase in sales.
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Engberg Company installs lawn sod in home yards. The company’smost recent monthly contribution format income statement follows:Amount Percent of Sales Sales $ 130,000 100 % Variable expenses52,000 40 % Contribution margin 78,000 60 % Fixed expenses 18,000Net operating income $ 60,000 Required: 1. What is the company’sdegree of operating leverage? 2. Using the degree of operatingleverage, estimate the impact on net operating income of a 27%increase in sales. 3. Construct a new contribution format incomestatement for the company assuming a 27% increase in sales.
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