Using a contribution margin format income statement to measure t

Using a contribution margin format income statement to measure the magnitude of operating leverage Willig Company, a merchandising firm, reported the following operating results: 

Income Statements $ 300,000 (180,000) Sales revenue (4,000 units x $75) Cost of goods sold (4,000 units x $45) Gross mar

.:.

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 that Willig will earn if sales revenue increases by 10 percent. 

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...

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