Question: Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows Amount % 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
a) Compute the company's degree of operating leverage.
b) Using the degree of operating leverage, estimate the impact on net operating income of a 28% increase in sales.