points The following income statement was drawn from the records of Thornton, a merchandising firm: THORNTON COMPANY Income Statement For the Year Ended December 31 Sales revenue (6,500 units $160) Cost of goods sold (6,500 units 583) He Gross margin Sales commissions (10% of sales) Print Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (6,500 units $3) Not income $1,092,000 (539,500) 552,500 (109,200) (85,000) (37,000) (48,000) (19,500) 253,800 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 Thornton will earn if sales increase by 20 percent. Complete this question by entering your answers in the tabs below. Req A Req B and C Reconstruct the income statement using the contribution margin format. THORNTON COMPANY Income Statement For the Year Ended December 31 Less: Variable costs Less: Fixed costs 0 $ 0 Req A Req B and C your answers in the tabs below. Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Thornton will earn if sales increase by 20 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 Net income