Problem 3-6 Profitability ratios (LO3-2) Dr. Zhivago Diagnostics Corp.'s income statement for 20X1 is as follows: Sales Cost of goods sold Gross profit Selling and administrative expense Operating profit Interest expense Income before taxes Taxes (30%) Income after taxes $ 2,880,000 2,130,000 $ 750,000 300,000 $ 450,000 52,100 $ 397,900 119,370 $ 278,530 a. Compute the profit margin for 20X1. (Input the profit margin as a percent rounded to 2 decimal places.) Profit margin b. Assume that in 20X2, sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin for 20x2? (Input the profit margin as a percent rounded to 2 decimal places.) 20X2 Income after taxes Profit margin %