Assessing the magnitude of operating leverage The following budgeted income statement applies to Musso Company:

Required

a. Use the contribution margin approach to calculate the magnitude of operating leverage.

b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Musso Company will earn if sales volume increases by 10 percent. Assume the sales price per unit remains unchanged at $90.

c. Verify your answer to Requirement b by constructing an alternative income statement based on a 10 percent increase in sales volume. The sales price per unit remains unchanged at $90. Calculate the percentage change in net income for the two income statements.