Company JKL has the following financial data:

• Sales Revenue: $800,000
• Sales Returns and Allowances: $40,000
• Net Sales: $760,000
• Cost of Goods Sold: $320,000
• Operating Expenses: $120,000
• Interest Expense: $12,000
• Tax Rate: 27%

Requirements:

1. Create an income statement.
2. Calculate the net profit margin.
3. Determine the total taxes paid.
4. Assess the effect of a 10% increase in operating expenses on net income.
5. Discuss the significance of cost of goods sold on overall profitability.