ABC Corporation has provided the following financial details:

• Total Sales: $500,000
• Sales Returns: $25,000
• Net Sales: $475,000
• Cost of Goods Sold: $200,000
• Operating Expenses: $60,000
• Interest Expense: $6,000
• Tax Rate: 35%

Requirements:

1. Draft an income statement.
2. Calculate the gross profit and operating profit.
3. Determine the tax liability.
4. Assess the impact of a 10% increase in sales on net income.
5. Analyze the role of operating expenses in the company’s profitability.