Dr. Gupta Diagnostics' income statement for 20XX is as follows:

Sales$2,530,000Cost of goods sold1,610,000Gross profit920,000Selling and administrative expense308,000Operating profit612,000Interest expense57,600Income before taxes554,400Taxes (30%)166,320Income after taxes$388,080

a.Compute the profit margin in 20XX.(Roundthe finalanswer to 2 decimal places.)

Profit margin15.00

15.00 Incorrect

%

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 theincome after taxes and profit margin in 20XY?(Round the profit margin to 2 decimal places.)

20XYIncome after taxes$319,080

319,080 Incorrect

Profit margin11.00

11.00 Incorrect

%