DIRECTIONS: Read through each scenario and determine if the business uses a production concept, sales concept, or marketing concept.
1. "We're very focused on understanding our customers and meeting their needs. And you
have to be. For example, 50 years ago our firm used to manufacture typewriters - well
nobody buys them anymore. Therefore, to be successful you have to adapt and meet
changing consumer needs and, fortunately, our firm is committed to that goal. And it's
working, last year we achieved both record profits and record customer satisfaction
scores."
Concept
Justification

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.