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

Income Statement
Sales revenue (440 units $36)	$	15,840
Variable cost (440 units $21)		(9,240	)
Contribution margin		6,600
Fixed cost		(4,600	)
Net income	$	2,000

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 Rundle 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.