Arnall Ltd., a British merchandising company, is the exclusive distributor of a product that is gaining rapid market acceptance. The company's revenues and expenses (in British pounds) for the last three months are given below: Arnall Ltd Comparative Income Statements For the Three Months Ended June 30 April May June Sales in units 1,500 4,600 6,400 Sales revenue Cost of goods sold 240,000 112,500 736,000 345,000 1,024,000 480,000 Gross margin 127,500 391,000 544,000 Selling and administrative expenses: Shipping expense Advertising expense Salaries and commissions Insurance expense Depreciation expense 36,200 58,000 83,000 6,000 32,900 82,700 58,000 207,000 6,000 32,900 109,700 58,000 279,000 6,000 32,900 Total selling and administrative expenses 216,100 386,600 485,600 Net operating income (loss) (88,600) 4,400 58,400 (Note: Arnall Ltd.'s income statement has been recast in the functional format common in the United States. The British currency is the pound, denoted by .)