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LE operating leverage LO 11-3, 11-4 The following income statement was drawn from the records of Walton, a merchandising firm: WALTON COMPANY Income Statement For the Year Ended December 31 Sales revenue (4,500 units * $167) Cost of goods sold (4,500 units X $83) Gross margin Sales commissions (5% of sales) Administrative saldries expense Advertising expense Depreciation expense Shipping and handling expenses (4,500 units * $4) Net income $ 751, 5ee (373,500) 378,000 (37,575) (82,000) (35, eee) (43,000) (18,000) $ 162,425 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 Walton will earn if sales increase by 20 perce Req A Req B and C Reconstruct the income statement using the contribution margin format. WALTON COMPANY Income Statement For the Year Ended December 31 Less: Variable costs Less: Fixed costs Req A Req B and C Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount Walton will earn if sales increase by 20 percent. (Round your intermediate calculations and Operating leverage decimal places. Round the "Net income" value to nearest whole dollar.) b. Operating leverago Net income C es