The following income statement was drawn from the records of Perez Company, a merchandising firm: PEREZ COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (4,500 units x $163) Cost of goods sold (4,500 units X $87) Gross margin Sales commissions (10% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (4,500 units x $1) Net income $ 733,500 (391,500) 342,000 (73,350) (81,000) (35,000) (44,000) (4,500) $ 104, 150 Required a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net income Perez will earn if sales increase by 10 percent. Complete this question by entering your answers in the tabs below. Req A Req B and C Reconstruct the income statement using the contribution margin format. PEREZ COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue $ 724,500 Less: Variable costs Cost of goods sold (400,500) Sales commissions (36,225) Shipping and handling expenses (4,500) 283,275 Contribution margin Less: Fixed costs Administrative salaries Advertising expense Depreciation expense 87,000 33,000 43,000 Net income $ 120,275