The following income statement applies to Kawai Company for the current year. Income Statement Sales revenue (200 units X $60) Variable cost (200 units * $36) Contribution margin Pixed cost Net income $12,000 (7,200) 4,800 (1.600) $ 3,200 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 Kawal 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 ReqC1 Reg C2 Use the contribution margin approach to calculate the magnitude of operating leverage. use the operating leverage measure computed in Requirement a to determine the amount of net income that Kawal 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 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 Kawal 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 ReqC1 Reg C2 Use the contribution margin approach to calculate the magnitude of operating leverage, use the operating leverage measure computed in Requirement a to determine the amount of net income that Kawal 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 1 decimal place.) times a Operating leverage b. Net income Ren A and B ReqC1 > Complete this question by entering your answers in the tabs below. Reg A and B ReqC1 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 Not income Complete this question by entering your answers in the tabs below. Reg A and B ReqC1 Req c2 Calculate the percentage change in net income for the two income statements, Change in net income
