Q1) Engberg Company installs lawn sod in home yards. Company most newly monthly contribution format income statement follows:
||Percent of Sales
|Less variable expanses
|Less fixed expenses
|Net operating income
1. find out company degree of operating leverage.
2. Using degree of operating leverage, evaluate impact on net income of 5% increase in sales.
3. Verify evaluation from part (2) above by creating new contribution format income statement for company suppose a 5% increase in sales.