Eneliko Company installs home theater systems. The company’s most recent monthly contribution format income statement appears below: Compute the company’s degree of operating leverage. (Round your answer to 2 decimal places.) Using the degree of operating leverage, estimate the impact on net operating income of a 16% increase in sales. (Input the amount as a positive value. Round your intermediate calculations and final answers to 2 decimal places.) Construct a new contribution format income statement for the company assuming a 16% increase in sales. (Input all amounts as positive values except losses which should be indicated by a minus sign.) Eneliko Company installs home theater systems. The company’s most recent monthly contribution format income statement appears below: Solution Statement showing computations Particulars Amount Sales 137,000.00 Variable Expenses 54,800.00 Contribution Margin 82,200.00 Fixed Expenses 20,000.00 Net opertaing Income 62,200.00 DOL= Contribution/EBIT 1.32 For every 1% increase in sales EBIT will increase by 1.32% for 16% inrease in sales EBIT will increase by = 16*1.32% = 21.14% Particulars Amount Sales 158,920.00 Variable Expenses 63,568.00 Contribution Margin 95,352.00 Fixed Expenses 20,000.00 Net opertaing Income 75,352.00 Existing operating Income 62,200.00 Difference 13,152.00 % incresae 21.14%.

1. Eneliko Company installs home theater systems. The company’s most recent monthly
contribution format income statement appears below:
Compute the company’s degree of operating leverage. (Round your answer to 2 decimal places.)
Using the degree of operating leverage, estimate the impact on net operating income of a 16%
increase in sales. (Input the amount as a positive value. Round your intermediate calculations and
final answers to 2 decimal places.)
Construct a new contribution format income statement for the company assuming a 16% increase
in sales. (Input all amounts as positive values except losses which should be indicated by a minus
sign.)
Eneliko Company installs home theater systems. The company’s most recent monthly
contribution format income statement appears below:
Solution
Statement showing computations Particulars Amount Sales 137,000.00
Variable Expenses 54,800.00 Contribution Margin 82,200.00
Fixed Expenses 20,000.00 Net opertaing Income 62,200.00
DOL= Contribution/EBIT 1.32 For every 1% increase in sales EBIT
will increase by 1.32% for 16% inrease in sales EBIT will increase by = 16*1.32% = 21.14%
Particulars Amount Sales 158,920.00 Variable Expenses
63,568.00 Contribution Margin 95,352.00 Fixed Expenses
20,000.00 Net opertaing Income 75,352.00 Existing operating Income
62,200.00 Difference 13,152.00 % incresae 21.14%