The following income statement applies to Rundle Company for the current year: Income Statement Sales revenue (440 units × $36) $ 15,840 Variable cost (440 units × $21) (9,240 ) Contribution margin 6,600 Fixed cost (4,600 ) Net income $ 2,000 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Rundle Company will earn if it experiences a 10 percent increase in revenue. The sales price per unit is not affected. c-1. Verify your answer to Requirement b by constructing an income statement based on a 10 percent increase in sales revenue. The sales price is not affected. c-2. Calculate the percentage change in net income for the two income statements.

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