In its income statement for the year ended December 31, 2012, Misra Company reported the following condensed data.

Administrative expenses ........ $465,000

Loss on disposal of Cost of goods sold .. 987,000

Plant assets ............. $ 83,500

Interest expense .............. 71,000

Net sales .............. 2,050,000

Interest revenue .............. 65,000

Income tax expense ........... 25,000

Selling expenses ............ 420,000

Instructions

(a) Prepare a multiple-step income statement.

(b) Calculate the profit margin ratio and gross profit rate.

(c) In 2011, Misra had a profit margin ratio of 5%. Is the decline in 2012 a cause for concern? (Ignore income tax effects.)