x ? Assignments ACTG 2020 x y Correct cure | https//newconnect.mheducation.com/f

Question

x ? Assignments ACTG 2020 x y Correct cure | https//newconnect.mheducation.com/fMlow/connect.htm Engberg Company installs lawn sod in home yords. The company's most recent monthly contribution format income statement follows Sales Anount % 130,000 Sales Verieble expenses Contributson margin Fixed expenses tiet operating income 78,000 5 59,000 Required: 1 What is the company's degree of operating leverage? 2 Using the degree of operating leverage, estmate the impect on ne: operating Income of o 1s incresse in sales 3 Construct a new contribution format ncome statement for the company ossuming m% increase sales. Complete this question by entering your answers in the tabs below Reqaires 1 Required 2 Required 3 What is the company's degree of operating leverage? (Round your answer to 2 decimal places

Explanation / Answer

a Operating leverage = Contribution margin / Operating income Contribution margin 78000 Net operating income 59000 Operating leverage 1.32 (78000/59000) b Increase in sales 11% Operating leverage 1.32 Increase in operating income 14.54% c Contribution margin statement Sales 144300 Variable expense 57720 Contribution margin 86580 Fixed expense 19000 Net operating income 67580

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