(a) on march 2, blossom company sold $853,600 of merchandise to kingbird company on account, terms 3/10, n/30. the cost of the merchandise sold was $540,300. (b) on march 6, kingbird company returned $114,200 of the merchandise purchased on march 2. the cost of the merchandise returned was $68,200. (c) on march 12, blossom company received the balance due from kingbird company.

Engberg company installs lawn sod in home yards. the company’s most recent monthly contribution format income statement follows: amount percent of sales sales $ 80,000 100% variable expenses 32,000 40% contribution margin 48,000 60% fixed expenses 38,000 net operating income $ 10,000 required: 1. compute the company’s degree of operating leverage. (round your answer to 1 decimal place.) 2. using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in sales. (do not round intermediate calculations.) 3. construct a new contribution format income statement for the company assuming a 5% increase in sales.