A comparative income statement is given below for McKenzie Sales, Ltd., of Toron

Question

A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto McKenzie Sales, Ltd Comparative Income Statement This Year Sales Cost of goods sold Gross margin Selling and administrative expenses: Last Year $7,360,000 $5,593,600 4,630,0003,508,500 2,085,100 2,730,000 Selling expenses Administrative expenses Total expenses Net operating income Interest expense Net income before taxes 1,078,000 613,000e 1,691,000 394,100 93,000 $ 540,000 $ 301,100 1,388,000 704,000 2,092,000 638,000e 98,000 Members of the company's board of directors are surprised to see that net income increased by only $238,900 when sales increased by $1,766,400 Required 1. Express each year's income stateent in common-size percentages. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

Explanation / Answer

This year Last year Sales 100.0% 100.0% Cost of goods sold 62.9% 62.7% Gross margin 37.1% 37.3% Selling and administrative expenses: Selling expenses 18.9% 19.3% Administrative expenses 9.6% 11.0% Total selling and administrative expenses 28.4% 30.2% Net operating income 8.7% 7.0% Interest expense 1.3% 1.7% Net income before taxes 7.3% 5.4%

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