3.5 4 The following income statement was drawn from the records of Baird Company, a merchandising...

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3.5 4 The following income statement was drawn from the records of Baird Company, a merchandising firm: BAIRD COMPANY Income Statement For the Year Ended December 31, Year 1 points Sales revenue (7,500 units × $163) Cost of goods sold (7,500 units × $86) Gross margin eBook Sales commissions (5% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (7,500 units × $2) Net income References Required $1,222,500 (645,000) 577,500 (61,125) (87,000) (35,000) (43,000) (15,000) $336,375 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 Baird will earn if sales increase by 20 percent. Complete this question by entering your answers in the tabs below. Req A Req B and C b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net income Baird will earn if sales increase by 20 percent. Note: Round your intermediate calculations and "Operating leverage" answer to 2 decimal places. Round the "Net income" value to nearest whole dollar. b. Operating leverage c. Net income < Req A Req B and C > Show less▲ 3.5 4 The following income statement was drawn from the records of Baird Company, a merchandising firm: BAIRD COMPANY Income Statement For the Year Ended December 31, Year 1 points Sales revenue (7,500 units × $163) Cost of goods sold (7,500 units × $86) Gross margin eBook Sales commissions (5% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (7,500 units × $2) Net income References Required $1,222,500 (645,000) 577,500 (61,125) (87,000) (35,000) (43,000) (15,000) $336,375 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 Baird will earn if sales increase by 20 percent. Complete this question by entering your answers in the tabs below. Req A Req B and C b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net income Baird will earn if sales increase by 20 percent. Note: Round your intermediate calculations and "Operating leverage" answer to 2 decimal places. Round the "Net income" value to nearest whole dollar. b. Operating leverage c. Net income < Req A Req B and C > Show less▲

Answer rating: 100% (QA)

Heres the income statement reconstructed using the contribution margin format Particulars Amount Sal... View the full answer