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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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12:42
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows.
Percent of
Sales
100%
40
60%
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income
Amount
$ 88,000
35,200
52,000
40,480
$12,320
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 8% increase in unit sales.
3. Construct a new contribution format income statement for the company assuming a 8% increase in unit sales.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Construct a new contribution format income statement for the company assuming a 8% increase in unit sales.
Engberg Company
Contribution Income Statement
Required 3
Amount Percent of Sales
%
%
%
Help"
Transcribed Image Text:7
12:42
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows.
Percent of
Sales
100%
40
60%
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income
Amount
$ 88,000
35,200
52,000
40,480
$12,320
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 8% increase in unit sales.
3. Construct a new contribution format income statement for the company assuming a 8% increase in unit sales.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Construct a new contribution format income statement for the company assuming a 8% increase in unit sales.
Engberg Company
Contribution Income Statement
Required 3
Amount Percent of Sales
%
%
%
Help
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