The following income statement was drawn from the records of Benson, a merchandising firm: BENSON COMPANY...

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The following income statement was drawn from the records of Benson, a merchandising firm: BENSON COMPANY Income Statement For the Year Ended December 31 Sales revenue (4,000 units x $169) $ 676,000 Cost of goods sold (4,000 units x $89) (356,000) Gross margin Sales commissions (5% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (4,000 units x $4) Net income 320,000 (33,800) (81,000) (30,000) (47,000) (16,000) $ 112,200 13 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 Benson will earn if sales increase by 10 percent. The following income statement was drawn from the records of Benson, a merchandising firm: BENSON COMPANY Income Statement For the Year Ended December 31 Sales revenue (4,000 units x $169) $ 676,000 Cost of goods sold (4,000 units x $89) (356,000) Gross margin Sales commissions (5% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (4,000 units x $4) Net income 320,000 (33,800) (81,000) (30,000) (47,000) (16,000) $ 112,200 13 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 Benson will earn if sales increase by 10 percent.

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