Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows:
Amount Percent of Sales
Sales $ 121,000 100%
Variable expenses 48,400 40%
Contribution margin 72,600 60%
Fixed expenses 19,000
Net operating income $ 53,600
1.Compute the company's degree of operating leverage. (Round your answer to 2 decimal places.)
2.Using the degree of operating leverage, estimate the impact on net operating income of a 22% increase in sales. (Round your intermediate calculations to 2 decimal places. Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34).)
3.Construct a new contribution format income statement for the company assuming a 22% increase in sales.