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Dr. Gupta Diagnostics income statement for 20XX is as follows: Sales $2,550,000 Cost of goods sold 1,740,000 Gross profit 810,000 Selling and administrative expense 357,000

Dr. Gupta Diagnostics income statement for 20XX is as follows: Sales $2,550,000 Cost of goods sold 1,740,000 Gross profit 810,000 Selling and administrative expense 357,000 Operating profit 453,000 Interest expense 59,900 Income before taxes 393,100 Taxes (30%) 117,930 Income after taxes $275,170 a. Compute the profit margin in 20XX. (Round the final answer to 2 decimal places.) Profit margin % b. Assume in 20XY sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Once again, assume a tax rate of 30 percent. What are the income after taxes and profit margin in 20XY? (Round the profit margin to 2 decimal places.) 20XY Income after taxes $ Profit margin %

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