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The following income statement was drawn from the records of Solomon Company, a merchandising firm: table [ [ SOLOMON COMPANY ] , [ Income
The following income statement was drawn from the records of Solomon Company, a merchandising firm:
tableSOLOMON COMPANYIncome Statement,,For the Year Ended December Year Sales revenue units $$Cost of goods sold units $Gross margin,Sales commissions of salesAdministrative salaries expense,Advertising expense,Depreciation expense,Shipping and handling expenses units $Net income,,
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 Solomon will earn if sales increase by percent.C
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