The following income statement applies to Baird Company for the current year:

Income StatementSales revenue (440 units $26)$11,440Variable cost (440 units $11)(4,840)Contribution margin6,600Fixed cost(3,600)Net income$3,000

Required

a.Use the contribution margin approach to calculate the magnitude of operating leverage.

b.Use the operating leverage measure computed in Requirementato determine the amount of net income that Baird Company will earn if it experiences a 15 percent increase in revenue. The sales price per unit is not affected.

c-1.Verify your answer to Requirementbby constructing an income statement based on a 15 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.

What is the change in Net Income? by %