E 3-4 Common-Size Income Statement MacDonald Company Comparative income statements for Macdonald Company for 20x2 and 20X1 are given below: Sales Cost of goods sold Gross profit on sales Selling and general expenses Operating income Interest expense Income before income tax Income tax expense Net income 20X2 $820,000 (515,000) $305,000 (110,000 $195,000 (45,000 $150,000 (45,000) $105,000 20X1 $465,000 (250,000) $215,000 (70,000) $145,000 (35,000) $110,000 (33,000) $ 77,000 Required 1. Prepare common-size income statements for Macdonald Company for 20X2 and 20X1. 2. Return on sales for Macdonald is lower in 20X2 than in 20X1. What expense or expenses are causing this lower profitability