Examine the incomes statements for 20X1 that follow and select, from the drop-down pick list that is associated with each boxed area, the gross profit margin and net profit margin for each. Correct selections will turn the boxed area green. After you have determined the correct margins, use that information to complete the anticipated income statements for 20X2 and 20X3, assuming no changes in the gross profit margin or the total amount of selling, general, and administrative costs. Note that sales for 20X2 and 20X3 are anticipated to be $1,200,000 and $800,000, respectively. Answer the last question at the bottom of the problem.
Income Statement Presentations For the Year Ending December 31, 20X1
		A Company	B Company
Sales		1,000,000	1,000,000
Less: Cost of goods sold		500,000	800,000
Gross profit		500,000	200,000
Selling, general, and administrative expenses		400,000	100,000
Net income		100,000	100,000
How much is the gross profit margin? >>>>
How much is the net profit margin? >>>>
Anticipated Income Statement Presentations For the Year Ending December 31, 20X2
		A Company	B Company
Sales		1,200,000	1,200,000
Less: Cost of goods sold
Gross profit
Selling, general, and administrative expenses		400,000	100,000
Net income		0	0
Gross profit margin >>>>		0%	0%
Net profit margin? >>>>		0%	0%
Anticipated Income Statement Presentations For the Year Ending December 31, 20X3
		A Company	B Company
Sales		800,000	800,000
Less: Cost of goods sold
Gross profit
Selling, general, and administrative expenses		400,000	100,000
Net income		0	0
Gross profit margin >>>>		0%	0%
Net profit margin? >>>>		0%	0%
Compare the fluctuations in net profit margins for each scenario. Which company's net profit margin is more susceptible to swings in sales?