The following income statement applies to Cohen Company for the current year.

Required
a. Use the contribution margin approach to calculate the magnitude of operating leverage.
b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Cohen Company will earn if it experiences a 10 percent increase in revenue. The sales price per unit is not affected.
c. Verify your answer to Requirement b by constructing an income statement based on a 10 percent increase in sales revenue. The sales price is not affected. Calculate the percentage change in net income for the two incomestatements.

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Income Statement Sales revenue (350 units x S25) $8,750 Variable cost (350 units X S10)3,500 Contribution margin Fixed costs Net income 5,250 3,500) $1,750