The following income statement was drawn from the records of Perez Company, a merchandising firm:

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 $20$ percent.

Complete this question by entering your answers in the tabs below.

Reconstruct the income statement using the contribution margin format.

Req $B$ and $C$

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 $20$

percent.

Note: Round your intermediate calculations and "Operating leverage" answer to $2$ decimal places. Round the "Net income"

value to nearest whole dollar.

b$.$ Operating leverage

c$.$ Net income