Exercise 11-15A (Algo) Using contribution margin format income statement to measure the magnitude of operating leverage LO 11-3, 11-4 The following income statement was drawn from the records of Perez, a merchandising firm: PEREZ COMPANY Income Statement For the Year Ended December 31 Sales revenue (6,000 units x $164) $ 984,000 Cost of goods sold (6,000 units 590) (540,000) Gross margin 444,000 Sales commissions (10% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (6,000 units $5) Net income (98,400) (84,000) (38,000) (45,000) (30,000) $148,600 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 Perez will earn if sales increase by 10 percent.