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 (5,000 units $162) $ 810,000 Cost of goods sold (5,000 units $86) (430,000 ) Gross margin 380,000 Sales commissions (5% of sales) (40,500 ) Administrative salaries expense (80,000 ) Advertising expense (39,000 ) Depreciation expense (50,000 ) Shipping and handling expenses (5,000 units $5) (25,000 ) Net income $ 145,500

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 20 percent. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.)