The following information pertains to XYZ Inc.:

• Revenue: $450,000
• Sales Discounts: $10,000
• Sales Returns: $15,000
• Cost of Goods Sold: $180,000
• Administrative Expenses: $70,000
• Selling Expenses: $40,000
• Income Tax Rate: 25%
• Interest Expense: $5,000

Requirements:

1. Create an income statement for XYZ Inc.
2. Calculate the gross profit margin.
3. Compute the earnings before tax.
4. Determine the net income after tax.
5. Evaluate the effect of a $10,000 decrease in cost of goods sold on net income.