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Admin Salaries

Advertising Expense

Cost Of Goods Sold

Depreciation Expense

Sales Commissions

Sales Revenue

Selling Expenses

Shipping and handling expenses

The following income statement was drawn from the records of Thornton Company, a merchandising firm: THORNTON COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (6,000 units x $166) Cost of goods sold (6,000 units * $89) Gross margin Sales commissions (10% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (6,000 units * $5) Net income $ 996,000 (534,000) 462,000 (99,600) (89,000) (36,000) (43,000) (30,000) $ 164,400 Required a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net income Thornton will earn if sales increase by 10 percent. Complete this question by entering your answers in the tabs below. Req A Req B and C Reconstruct the income statement using the contribution margin format. THORNTON COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue $ 996,000 Less: Variable costs 996,000 Less: Fixed costs $ 996,000

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