Exercise 14-1 (Algo) Common-Size Income Statement [LO14-1] A comparative income statement is given below for McKenzie Sales, Limited, of Toronto: McKenzie Sales, Limited Comparative Income Statement Sales Cost of goods sold Gross margin This Year $ 7,340,000 4,750,000 2,590,000 Last Year $ 5,578,400 3,508,500 2,069,900 Selling and administrative expenses: 1,393,000 1,080,000 Administrative expenses 708,500 Selling expenses Total expenses Net operating income Interest expense Net income before taxes 2,101,500 488,500 100,000 $ 388,500 611,000 1,691,000 378,900 89,000 $ 289,900 Members of the company's board of directors are surprised to see that net income increased by only $98,600 when sales increased by $1,761,600. Required: 1. Express each year's income statement in common-size percentages. (Round your percentage answers to 1 decimal place (l.e., 0.1234 should be entered as 12.3).) This Year Last Year Sales 100.0 % 100.0 % Cost of goods sold 62.8% 63.0 % Gross margin 37.2 % 37.0 % Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Net operating income Interest expense Net income before taxes % 96 9.7 % 11.0 % 9.7 % 11.0 % 27.5% 26.0 % %6 96 27.5 % 26.0 %