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

Income Statement
Sales revenue (200 units $60)	$	12,000
Variable cost (200 units $36)		(7,200	)
Contribution margin		4,800
Fixed cost		(1,600	)
Net income	$	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 Kawai 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.