The following income statement applies to Adams Company for the current year: Income Statement Sales revenue (400 units x $25) Variable cost (400 units x $10) Contribution margin Fixed cost $10,000 (4,000) 6,000 (3,500) $ 2,500 Net income 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 Adams Company will earn if it experiences a 10 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 10 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 Req 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 Adams Company will earn if it experiences a 10 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 Net income b Req A and B ReqC1 > Income Statement Sales revenue (400 units X $25) Variable cost (400 units x $10) Contribution margin Fixed cost Net income $10,000 (4,000) 6,000 (3,500) $ 2,500 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 Adams Company will earn if it experiences a 10 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 10 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. Req A and B Reg C1 Req C2 Verify your answer to Requirement b by constructing an income statement based on a 10 percent increase in sales revenue. The sales price is not affected. Annual Income Statement Sales revenue Variable cost Contribution margin Fixed cost Net income Req A and B Req C2 Exercise 2-14A (Algo) Assessing the magnitude of operating leverage LO 2-4 The following income statement applies to Adams Company for the current year: Income Statement Sales revenue (400 units X $25) Variable cost (400 units x $10) Contribution margin Fixed cost Net income $10,000 (4,000) 6,000 (3,500) $ 2,500 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 Adams Company will earn if it experiences a 10 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 10 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. Req A and B Req C1 Reg C2 Calculate the percentage change in net income for the two income statements. Change in net income ReqC1 Reg C2