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 1 Sales revenue (5,000 units * $160) Cost of goods sold (5,000 units X 580) Gross margin Sales commissions (10% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (5,000 units X 53) Net income $ 800.000 (400,000) 400,000 (80,000) (90,000) (34,000) (42,000) (15,000) $ 139,000 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 Adams will earn if sales increase by 10 perce Req A Reg 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 Less: Fixed costs