3 The following income statement was drawn from the records of Thornton Company, a merchandising firm Gross margin THORNTON COMPANY 25 Income Statement points for the Year Ended December 31, Year 11 Sales revenue (5,000 units x $164) $820,000 Cost of goods sold (5,000 units $86) (430,000) 390,000 (82,000) (84,000) (36,000) (44,000) (20,000) $124,000 eBook Hint Print Deferences Sales commissions (10% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (5,000 units $4) Net income Required a. Reconstruct the income statement using the contribution margin format b. Calculate the magnitude of operating leverage c. Use the measure of operating leverage to determine the amount of net income Thornton will earn if sales increase by 20 percent Complete this question by entering your answers in the tabs below. Req A Req B and C Reconstruct the income statement using the contribution margin format. THORNTON COMPANY Income Statement For the Year Ended December 31, Year 1 Less Variable costs 25 poirits The following income statement was drawn from the records of Thornton Company, a merchandising firm THORNTON COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (5,000 units x $164) Cost of goods sold (5,000 units x $86) Gross margin Sales commissions (10% of sales) eBook Hint Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (5,000 units x 54) Net income Required $820,000 (430,000) 390,000 (82,000) (84,000) (36,000) (44,000) (20,000) $124,000 Print C References a. Reconstruct the income statement using the contribution margin format b. Calculate the magnitude of operating leverage c. Use the measure of operating leverage to determine the amount of net income Thornton will earn if sales increase by 20 per Complete this question by entering your answers in the tabs below. Req A Req B and C Reconstruct the income statement using the contribution margin format. THORNTON COMPANY Income Statement For the Year Ended December 31, Year 1 Less Variable costs 25 3 Complete this question by entering your answers in the tabs below. Req A points Req B and C eBook Hint Print References Reconstruct the income statement using the contribution margin format. THORNTON COMPANY Income Statement For the Year Ended December 31, Year 1 Less: Variable costs Less Fixed costs Req A Req B and C > Print Complete this question by entering your answers in the tabs below. ferences Req A Req B and C b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net income Thornton will earn if sales increase by 20 percent. Note: Round your intermediate calculations and "Operating leverage" answer to 2 decimal places. Round the "Net income" value to nearest whole dollar. b. Operating leverage c. Net income Req A Rey B and C Show less A