Techtronics Software, Inc. specializes in customized spreadsheet software. The results of the companys operations during the prior year (20xx) are given in the following table. All units produced during the year were sold. (Ignore income taxes.)

Sales revenue $ 3,900,000

Manufacturing costs:

Fixed 545,000

Variable 1,090,000

Selling costs:

Fixed 59,000

Variable 145,000

Administrative costs:

Fixed 129,000

Variable 39,000

Required:

1-a. Prepare a traditional income statement for the company.

1-b. Prepare a contribution income statement for the company.

2. What is the firms operating leverage for the sales volume generated during the prior year?

3. Suppose sales revenue increases by 15 percent. What will be the percentage increase in net income?