The following income statement applies to Solomon Company for the current year: Income Statement Sales revenue (420 $15,960 units x $38) Variable cost (420 (9,660) units x $23) Contribution margin 6,300 Fixed cost (4,800) Net income $ 1,500 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 Solomon Company will earn if it experiences a 15 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 15 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 Requirement Requirement CI C2 Use the contribution margin approach to calculate the magnitude of operating leverage. Afterwards, use the operating leverage measure previously computed for Requirement A to determine the amount of net income that Solomon Company will earn fit experiences a 15 percent increase in revenue. The sales price per unit is not affected. (Do not round Intermediate calculations. Round "Operating leverage to 2 decimal place.) Show less a b. Operating leverage Net income Re AB Requirement C1 > The following income statement applies to Solomon Company for the current year: Income Statement Sales revenue (420 $15,960 units x $38) Variable cost (420 (9,660) units x $23) Contribution margin 6,300 Fixed cost (4,800) Net income $ 1,500 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 Solomon Company will earn if it experiences a 15 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 15 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 Requirement Requirement C1 Verify your answer to Requirement b by constructing an income statement based on a 15 percent increase in sales revenue. The sales price is not affected. Annual Income Statement Sales revenue Variable cost Contribution margin Foed cost Net income S ( Req A and B Requirement C2 > Income Statement cales revenue (420 $15.960 units x $38) "ariable cost (420 (9,660) nits x $23) Contribution margin 6,300 Fixed cost (4,800) et income $ 1,500 equired Use the contribution margin approach to calculate the magnitude of operating Jerage. Use the operating leverage measure computed in Requirement a to determine the mount of net income that Solomon Company will earn if it experiences a 15 percent crease in revenue. The sales price per unit is not affected. 1. Verify your answer to Requirement b by constructing an income statement based on a percent increase in sales revenue. The sales price is not affected. 2. Calculate the percentage change in net income for the two income statements. Complete this question by entering your answers in the tabs below. meg Aande Requisement Requirement alculate the percentage change in net income for the two income statements mange in net income (Requirement C1 Hacement
