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What is the degree of operating leverage

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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.

Reference no: EM131805333

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