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 4,630,000 3,512,500 Gross margin 2,680,000 2,043,100 Selling and administrative expenses: Selling expenses 1,394,000 1,078,000 Administrative expenses 706,000 614,000 Total expenses 2,100,000 1,692,000 Net operating income 580,000 \351,100\ Interest expense 101,000 91,000 Net income before taxes $ 479,000 $ \260,100\ Members of the company's board of directors are surprised to see that net income increased by only $218,900 when sales increased by $1,754,400.