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 (4,000 units $161)	$	644,000
Cost of goods sold (4,000 units $86)		(344,000	)
Gross margin		300,000
Sales commissions (5% of sales)		(32,200	)
Administrative salaries expense		(90,000	)
Advertising expense		(37,000	)
Depreciation expense		(42,000	)
Shipping and handling expenses (4,000 units $5)		(20,000	)
Net income	$	78,800

Required
a.	Reconstruct the income statement using the contribution margin format.

b.	Calculate the magnitude of operating leverage. (Round your answer to 2 decimal places.)

c.	Use the measure of operating leverage to determine the amount of net income Butler will earn if sales increase by 10 percent. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.)