If a company's capacity utilization is very high (say, 120%) which of the following will betrue: a. More can be produced, but inefficiently, so production costs will rise. b. As more is produced, productivity and efficiency increase. c. Production can be increased without an increase in costs that causes prices to increase. d. As more is produced labor costs per unit of output decrease because labor productivity is increasing.

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.