Blossom Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the companys fiscal year on November 30, 2022, these accounts appeared in its adjusted trial balance.

Accounts Payable Accounts Receivable Accumulated Depreciation-Equipment Cash Common Stock Cost of Goods Sold Freight-Out Equipment Depreciation Expense Dividends Gain on Disposal of Plant Assets Income Tax Expense Insurance Expense Interest Expense Inventory Notes Payable Prepaid Insurance Advertising Expense Rent Expense Retained Earnings Salaries and Wages Expense Sales Revenue $ 13,400 8,600 34,000 4,000 17,500 304,980 3,150 79,730 6,700 6,000 1,000 5,000 4,500 2,500 13,100 21,750 3,000 16,750 17,000 7,100 59,440 452,000 Insurance Expense Interest Expense Inventory Notes Payable Prepaid Insurance Advertising Expense Rent Expense Retained Earnings Salaries and Wages Expense Sales Revenue Salaries and Wages Payable Sales Returns and Allowances Utilities Expense 4,500 2,500 13,100 21,750 3,000 16,750 17,000 7,100 59,440 452,000 3,000 10,000 5,300 The vice president of marketing and the director of human resources have developed a proposal whereby the company would compensate the sales force on a strictly commission basis. Given the increased incentive, they expect net sales to increase by 15%. As a result, they estimate that gross profit will increase by $20,553 and expenses by $28,067. Compute the expected new net income. (Hint: You do not need to prepare an income statement.) Then, compute the revised profit margin and gross profit rate. Comment on the effect that this plan would have on net income and on the ratios, and evaluate the merit of this proposal. (Ignore income tax effects.) Revised net income $ 17680 Revised profit margin (Round to 1 decimal place, e.g. 15.2%) 3.9 % Revised gross profit rate (Round to 1 decimal place, e.g. 15.2%) 31 %