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Arnall Ltd., a British merchandising company, is the exclusive distributor of a product that is gaining rapid market acceptance. The companys 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		3,000				6,300			8,000
Sales revenue		600,000				1,260,000			1,600,000
Cost of goods sold		258,000				541,800			688,000
Gross margin		342,000				718,200			912,000
Selling and administrative expenses:
Shipping expense		59,400				108,900			134,400
Advertising expense		60,000				60,000			60,000
Salaries and commissions		193,000				361,300			448,000
Insurance expense		6,600				6,600			6,600
Depreciation expense		34,500				34,500			34,500
Total selling and administrative expenses		353,500				571,300			683,500
Net operating income (loss)		(11,500)				146,900			228,500

(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 .)