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

Income Statement
Sales revenue (540 units $41)	$22,140
Variable cost (540 units $26)	(14,040)
Contribution margin	8,100
Fixed cost	(5,100)
Net income	$3,000

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 Vernon 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.

a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Afterwards, use the operating leverage measure previously computed for Requirement A to determine the amount of net income that Vernon Company will earn if it experiences a 10 percent increase in revenue. The sales price per unit is not affected. Note: Do not round intermediate calculations. Round "Operating leverage" to 2 decimal places. Verify your answer to Requirement b by constru The sales price is not affected. Calculate the percentage change in net income for the two income statements