The following income statement was drawn from the records of Campbell Company, a merchandising firm:...
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The following income statement was drawn from the records of Campbell Company, a merchandising firm: CAMPBELL COMPANY Income Statement For the Year Ended December 31, 2018 Sales revenue (6,000 units $168) $ 1,008,000 Cost of goods sold (6,000 units $89) (534,000 ) Gross margin 474,000 Sales commissions (10% of sales) (100,800 ) Administrative salaries expense (88,000 ) Advertising expense (30,000 ) Depreciation expense (42,000 ) Shipping and handling expenses (6,000 units $4) (24,000 ) Net income $ 189,200 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 Campbell will earn if sales increase by 20 percent.
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