Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows:
|Net operating income||$||10,000|
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 5% increase in unit sales.
3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales.