The following income statement was drawn from the records of Adams Company, a merchandising firm ADAMS COMPANY Income Statement For the Year Ended December 31, Year Sales revenue (7,000 units x $161) 127,000 Cost of goods sold (7,000 units x $86) (602,000 Gross margin 525,000 Sales commissions (5% of sales) (56,350) Book Administrative salaries expense Advertising expense Depreciation expense (82,000) (32,000 (46,000) Shipping and handling expenses (7,000 units x $5) (35,000) Net income Hint $273,650 Required Print eferences 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 Adams will earn if sales increase by 20 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. ADAMS COMPANY Income Statement For the Year Ended December 31, Year 1 Less: Variable costs Mc Graw Hill ype here to search < Prev 8 of 10 Next