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Exercise 13-1 Common-Size Income Statement [LO13-1] A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd. Comparative Income Statement

Exercise 13-1 Common-Size Income Statement [LO13-1]

A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto:

McKenzie Sales, Ltd. Comparative Income Statement
This Year Last Year
Sales $ 7,300,000 $ 5,548,000
Cost of goods sold 4,650,000 3,510,500
Gross margin 2,650,000 2,037,500
Selling and administrative expenses:
Selling expenses 1,386,000 1,074,000
Administrative expenses 705,000 608,500
Total expenses 2,091,000 1,682,500
Net operating income 559,000 355,000
Interest expense 98,000 91,000
Net income before taxes $ 461,000 $ 264,000

Members of the companys board of directors are surprised to see that net income increased by only $197,000 when sales increased by $1,752,000.

Required:
1.

Express each year's income statement in common-size percentages. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

This year Last year
Sales
Gross Margin

Selling and administrative expenses:

Selling expenses
administrative expenses
total selling and administrative expenses
net operating income
interest income
net income before taxes

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