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A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales $
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto:
McKenzie Sales, Ltd. Comparative Income Statement | ||||||
This Year | Last Year | |||||
Sales | $ | 7,300,000 | $ | 5,548,000 | ||
Cost of goods sold | 4,680,000 | 3,514,500 | ||||
Gross margin | 2,620,000 | 2,033,500 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 1,392,000 | 1,076,000 | ||||
Administrative expenses | 707,000 | 612,500 | ||||
Total expenses | 2,099,000 | 1,688,500 | ||||
Net operating income | 521,000 | 345,000 | ||||
Interest expense | 101,000 | 92,000 | ||||
Net income before taxes | $ | 420,000 | $ | 253,000 | ||
Members of the companys board of directors are surprised to see that net income increased by only $167,000 when sales increased by $1,752,000.
Required:
1. Express each year's income statement in common-size percentages. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
This Year 100.0 % Last Year 100.0 % Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses 100.0 % 100.0 % Administrative expenses 0.0 % 100.0 % 0.0 100.0 % Total selling and administrative expenses Net operating income Interest expense Net income before taxes 100.0 % 100.0 %
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