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

BUTLER COMPANY Income Statement For the Year Ended December 31, 2014
Sales revenue (5,500 units $167)	$	918,500
Cost of goods sold (5,500 units $89)		(489,500	)
Gross margin		429,000
Sales commissions (10% of sales)		(91,850	)
Administrative salaries expense		(88,000	)
Advertising expense		(31,000	)
Depreciation expense		(45,000	)
Shipping and handling expenses (5,500 units $2)		(11,000	)
Net income	$	162,150

Required:

a.

Reconstruct the income statement using the contribution margin format.

BUTLER COMPANY
Income Statement
For the Year Ended December 31, 2014

(fill in table above)

b.	Calculate the magnitude of operating leverage. (Round your answer to one decimal place.)

Operating leverage ?

Times

c.	Use the measure of operating leverage to determine the amount of net income Butler will earn if sales increase by 20 percent. (Round your intermediate calculations to one decimal place and final answer to the nearest whole dollar amount.)
Net income ?