Question 2-48, CVP and Financial Statements for a Mega-Brand Company, on p. 82 Procter & Gamble Company is a Cincinnati-based company that produces hosehold products under brand names such as Gillette, Bounty, Crest, Folgers, and Tide. The companys 2006 income statement showed the following (in millions): _________________________________________________________________________ Net income $68,222 Costs of products sold 33,125 Selling, general, and administrative expense 21,848 Operating income $13,249 ______________________________________________________________________ Suppose that the cost of products sold is the only variable cost; selling, general, and administrative expense are fixed with respect to sales. Assume that Proctor & Gamble had a 10% increase in sales in 2007 and that there was no change in costs except for increases associated with the higher volume of sales. Compute the predicted 2007 operating income for Procter & Gamble and its percentage increase. Explain why the percentage increase in income differs from the percentage increase in sales.