operating leverage LO 11-3, 11-4 The following income statement was drawn from the records of Munoz, a merchandising firm: MUNOZ COMPANY Income Statement: For the Year Ended December 31 Sales revenue (6,500 units x $168) $1,092,000 2:35 Cost of goods sold (6,500 units $89) (578,500) Gross margin Sales commissions (5% of sales)) Administrative salaries expense Advertising expense Depreciation expense 513,500 (54,600) (87,000) (36,000) (46,000) Shipping and handling expenses (6,500 units x $5) (32,500) Net income $ 257,400 ces 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 Munoz will earn if sales increase by 10 percent. Reconstruct the income statement using the contribution margin format. MUNOZ COMPANY Income Statement For the Year Ended December 31 Less: Variable costs Less: Fixed costs 0 $ Complete this question by entering your answers in the tabs below. Req A Req B and C Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Munoz will earn if sales increase by 10 percent. (Round your intermediate calculations and "Operating leverage" answer to 2 decimal places. Round the "Net income" value to nearest whole dollar.) b. Operating leverage C Net income < Req A Req B and C