The following income statement was drawn from the records of Fanning, a merchandising firm: FANNING COMPANY Income Statement For the Year Ended December 31 Sales revenue (7,000 units $165) Cost of goods sold (7,000 units $85) Sales commissions (5% of sales). Gross margin Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (7,000 units $3) Net income Required $1,155,000 (595,000) 560,000 (57,750) (82,000) (34,000) (45,000) (21,000) $ 320,250 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 Fanning 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. FANNING COMPANY Income Statement For the Year Ended December 31