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 Walton Company, a merchandising firm: WALTON COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (6,000 units x $165) Cost of goods sold (6,000 units x $88) Gross margin Sales commissions (5% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (6,000 units X $5) Net income $ 990,000 (528,000) 462,000 (49,500) (90,000) (32,000) (44,000) (30,000) $ 216,500 Required a. Reconstruct the income statement using the contribution margin format. c. Use the measure of operating leverage to determine the amount of net income Walton 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 Complete this question by entering your answers in the tabs below. Req A Req B and C Reconstruct the income statement using the contribution margin format. WALTON COMPANY Income Statement For the Year Ended December 31, Year 1 Less: Variable costs Less: Fixed costs 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 Walton will earn if sales increase by 20 percer Complete this question by entering your answers in the tabs below. Req A Req B and C Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Walton will earn if sales increase by 20 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 c. Net income