Answer Happy

The following income statement was drawn from the records of Butler Company, a merchandising firm: BUTLER COMPANY Income Statement For the Year Ended December 31, 2014 Sales revenue (7,500 units x $168) Cost of goods sold (7,500 units * $84) Gross margin Sales commissions (5% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (7,500 units × $2) Net income $1,260,000 (630,000) 630,000 (63,000) (81,000) (31,000) (48,000) (15,000) $ 392,000
Required a. Reconstruct the income statement using the contribution margin format. BUTLER COMPANY Income Statement For the Year Ended December 31, 2014 Less: Variable costs Less: Fixed costs b. Calculate the magnitude of operating leverage. (Round your answer to 2 decimal places.) Operating leverage times
b. Calculate the magnitude of operating leverage. (Round your answer to 2 decimal places.) Operating leverage times c. Use the measure of operating leverage to determine the amount of net income Butler will earn if sales increase by 20 percent. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.) Net income