Exercise 2-13A (Algo) Using contribution margin format income statement to measure the magnitude of operating leverage LO 2-3, 2-4 The following income statement was drawn from the records of Gibson Company, a merchandising firm: GIBSON COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (5,500 units * $160) $ 880,000 Cost of goods sold (5,500 units X $83) (456,500) Gross margin 423,500 Sales commissions (5% of sales) (44,000) Administrative salaries expense (82,000) Advertising expense (39,000) Depreciation expense (43,000) Shipping and handling expenses (5,500 units X $3) (16,500) Net income $ 199,000 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 Gibson will earn if sales increase by 10 percent Req A Req B and C Reconstruct the income statement using the contribution margin format. GIBSON COMPANY Income Statement For the Year Ended December 31, Year 1 Less: Variable costs Less: Fixed costs Don Band 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 Gibson will eam if sales increase by 10 percent Complete this question by entering your answers in the tabs below. sok Reg A Reg Band once Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Gibson will earn if sales increase by 10 percent. (Round your intermediate calculations and Operating leverage answer to 2 decimal places. Round the "Net Income" value to nearest whole dollar) b Operating leverage Not income C.