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

McKenzie Sales, Ltd. Comparative Income Statement
	This Year			Last Year
Sales	$	7,310,000		$	5,555,600
Cost of goods sold		4,750,000			3,511,500
Gross margin		2,560,000			2,044,100
Selling and administrative expenses:
Selling expenses		1,380,000			1,072,500
Administrative expenses		703,000			612,000
Total expenses		2,083,000			1,684,500
Net operating income		477,000			359,600
Interest expense		102,000			86,000
Net income before taxes	$	375,000		$	273,600

Members of the companys board of directors are surprised to see that net income increased by only $101,400 when sales increased by $1,754,400.