Fillmore, Inc. specializes in customized optimization spreadsheet software. The results of the company's operations during the prior year $(20$ are given in the following table. All units produced during the year were sold. $($Ignore income taxes.$)$

Sales revenue

$6,000,000$

Manufacturing costs:

Fixed

$1,000,000$

$2,000,000$

Variable

$2,000,000$

Selling costs:

Fixed

$100,000$

Variable

$200,000$

Administrative costs:

Fixed

$240,000$

Variable

$60,000$

Prepare a traditional income statement for the company:

Prepare a contribution income statement for the company:

a$)$ What is the firm's operating leverage for the sales volume generated during the prior year?

b$)$ Using the operating leverage calculated in $(2$a$)$ above, and assuming sales revenue increases by $20\%,$ what will be the percentage increase in net income? $($Use the degree of operating leverage to make this calculation and show your equation$)$

Would an operating manager use a traditional income statement or a contribution income statement to answer requirement $(2)$ and why?