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Exercise 2-14A (Algo) Assessing the magnitude of operating leverage LO 2-4 The following income statement applies to Perez Company for the current year: Income Statement Sales revenue (389 units x $35) Variable cost (389 units x $29) Contribution margin Fixed cost Net income $13,300 (7,600) 5.799 (4,500) $ 1,200 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Perez Company will earn if it experiences a 20 percent increase in revenue. The sales price per unit is not affected. c-1. Verify your answer to Requirement b by constructing an income statement based on a 20 percent increase in sales revenue. The sales price is not affected. c-2. Calculate the percentage change in net income for the two income statements. Complete this question by entering your answers in the tabs below. Reg A and B Reg C1 Reg C2 Use the contribution margin approach to calculate the magnitude of operating leverage. Afterwards, use the operating leverage measure previously computed for Requirement A to determine the amount of net income that Perez Company will earn if it experiences a 20 percent increase in revenue. The sales price per unit is not affected. (Do not round intermediate calculations. Round "Operating leverage to 2 decimal place.) Show less a. Operating leverage b. Net income Ren A and B ReqC1 > Exercise 2-14A (Algo) Assessing the magnitude of operating leverage LO 2-4 The following income statement applies to Perez Company for the current year: Income Statement Sales revenue (388 units x $35) Variable cost (388 units x $29) Contribution margin Fixed cost Net income $13,300 (7.600) 5,700 (4,50e) $ 1,200 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Perez Company will earn if it experiences a 20 percent increase in revenue. The sales price per unit is not affected. c-1. Verify your answer to Requirement b by constructing an income statement based on a 20 percent increase in sales revenue. The sales price is not affected. c-2. Calculate the percentage change in net income for the two income statements. Complete this question by entering your answers in the tabs below. Reg A and B Reg C1 Reg C2 Verify your answer to Requirement b by constructing an income statement based on a 20 percent increase in sales revenue. The sales price is not affected. Annual Income Statement Sales revenue Variable cost Contribution margin Fixed cost Net income S Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Perez Company will earn if it experiences a 20 percent increase in revenue. The sales price per unit is not affected. c-1. Verify your answer to Requirement b by constructing an income statement based on a 20 percent increase in sales revenue. The sales price is not affected. c-2. Calculate the percentage change in net income for the two income statements. Complete this question by entering your answers in the tabs below. Reg A and B Rea C1 Reg C2 Calculate the percentage change in net income for the two income statements. Change in net income