Consider the following statement: The market system is a profit-and-loss system. This statement is: a. True, because producer decisions are motivated by the attempt to earn profits. b. False, because consumers purchase only what they want, providing producers profits. c. False, because the market system does much more than provide profits and losses. d. True, because consumers purchase only what they want, providing producers profits.

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.