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The following income statement applies to Gibson Company for the current year: Required a. Use the contribution margin approach to calculate the magnitude of operating
The following income statement applies to Gibson Company for the current year: 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 Gibson 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 Requirement b by 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
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