Business, 25.02.2020 17:52 QueenNerdy889

Using contribution margin format income statement to measure the magnitude of operating leverage LO 11-3, 11-4The following income statement was drawn from the records of Rundle Company, a merchandising firm:RUNDLE COMPANYIncome StatementFor the Year Ended December 31, 2018Sales revenue (6,500 units Ã $161) $ 1,046,500 Cost of goods sold (6,500 units Ã $87) (565,500)Gross margin 481,000 Sales commissions (5% of sales) (52,325)Administrative salaries expense (81,000)Advertising expense (33,000)Depreciation expense (44,000)Shipping and handling expenses (6,500 units Ã $2) (13,000)Net income $ 257,675 Required:Reconstruct the income statement using the contribution margin format. Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Rundle will earn if sales increase by 20 percent. Reconstruct the income statement using the contribution margin format.

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Using contribution margin format income statement to measure the magnitude of operating leverage LO...

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