Exercise 7-28 Publishing: Contribution Income Statement (LO 7-7, 7-8) 500,000 Europa Publications, Inc. specializes in reference books that keep abreast of the rapidly changing politi- cal and economic issues in Europe. The results of the company's operations during the prior year are given in the following table. All units produced during the year were sold. (Ignore income taxes.) Sales revenue $2,000,000 Manufacturing costs Fixed Variable 1,000,000 Selling costs Fixed 50,000 Variable 100,000 Administrative costs: 120,000 Variable 30,000 Flyed Required: 1. Prepare a traditional income statement and a contribution income statement for the company. 2. What is the firm's operating leverage for the sales volume generated during the prior year? 3. Suppose sales revenue increases by 10 percent. What will be the percentage increase in net income? 4. Which income statement would an operating manager use to answer requirement (3)? Why