The following income statement applies to Rooney 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 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.

Complete this question by entering your answers in the tabs below.

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.