McKenzie Sales, Limited Comparative Income Statement This Year Last Year Sales $ 7,380,000 $ 5,608,800 Cost of goods sold 4,730,000 3,510,500 Gross margin 2,650,000 2,098,300 Selling and administrative expenses: Selling expenses 1,394,000 1,080,500 Administrative expenses 703,500 608,500 Total expenses 2,097,500 1,689,000 Net operating income 552,500 409,300 Interest expense 102,000 85,000 Net income before taxes $ 450,500 $ 324,300 Members of the companys board of directors are surprised to see that net income increased by only $126,200 when sales increased by $1,771,200.