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(Attached) are thepartiallyincorrect answers. Arnall Ltd., a British merchandising company, is the exclusive distributor of a product that is gaining rapid market acceptance. The companys

(Attached) are thepartiallyincorrect answers.

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
AprilMayJune
Sales in units3,000 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 margin342,000 718,200 912,000

Selling and administrative expenses:
Shipping expense59,400 108,900 134,400
Advertising expense60,000 60,000 60,000
Salaries and commissions193,000 361,300 448,000
Insurance expense6,600 6,600 6,600
Depreciation expense34,500 34,500 34,500

Total selling and administrative expenses353,500 571,300 683,500

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 .)

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