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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,
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 (6,000 units $160) Cost of goods sold (6,000 units * $86) $960,000 (516,000) Gross margin Sales commissions (10% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (6,000 units $3) 444,000 (96,000) (88,000) (38,000) (48,000) (18,000) Net income $ 156,000 Required a. Reconstruct the income statement using the contribution margin format. BUTLER COMPANY Income Statement For the Year Ended December 31, 2014 Less: Variable costs Less: Fixed costs Calculate the magnitude of operating leverage. (Round your answer to 2 decimal b. places.) Operating leverage times 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.) Net income
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