1. Margin Calculations (LO3, CFA7) Use the following income statement for Paul Bunyan Lumber Co. to calculate gross and operating margins:

Paul Bunyan Lumber 2019 Income Statement Net sales $ 8,000 Cost of goods sold (6,400)

Gross profit $ 1,600 Operating expenses (400)

Operating income $ 1,200 Other income 80 Net interest expense (120)

Pretax income $ 1,160 Income tax (464)

Net income $ 696 Earnings per share $ 3.48 Recent share price $ 76.56