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The following income statement applies to Rooney Company for the current year: Income Statement Sales revenue (550 units x $45) $24, 750 Variable cost (550

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The following income statement applies to Rooney Company for the current year: Income Statement Sales revenue (550 units x $45) $24, 750 Variable cost (550 units x $30) (16, 500) Contribution margin 8, 250 Fixed cost (5,500) Net income $2, 750 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 Rooney Company will earn if it experiences a 20 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 20 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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