The following income statement was drawn from the records of Rundle Company, a merchandising firm: RUNDLE COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (6,000 units × $162) $ 972,000 Cost of goods sold (6,000 units × $81) (486,000 ) Gross margin 486,000 Sales commissions (10% of sales) (97,200 ) Administrative salaries expense (83,000 ) Advertising expense (37,000 ) Depreciation expense (42,000 ) Shipping and handling expenses (6,000 units × $2) (12,000 ) Net income $ 214,800 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.