Reference no: EM131692131

A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto:

McKenzie Sales, Ltd.
Comparative Income Statement

	This Year	Last Year
Sales	$	8,000,000		$	6,000,000
Cost of goods sold		4,984,000			3,516,000
Gross margin		3,016,000			2,484,000
Selling and administrative expenses:
Selling expenses		1,480,000			1,092,000
Administrative expenses		712,000			618,000
Total expenses		2,192,000			1,710,000
Net operating income		824,000			774,000
Interest expense		96,000			84,000
Net income before taxes	$	728,000		$	690,000

Members of the company's board of directors are surprised to see that net income increased by only $38,000 when sales increased by two million dollars.

Required:

1. Express each year's income statement in common-size percentages. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

Sales 100.0 % 100.0 %Cost of goods sold 62.3 % 58.6 %Gross margin 37.7 % 41.4 %Selling and administrative expenses: Selling expenses % %Administrative expenses 8.4 % 9.7 %Total selling and administrative expenses 8.4 % 9.7 %Net operating income 29.3 % 31.7 %Interest expense 1.2 % 1.4 %Net income before taxes 28.1 % 30.3
%
Sales 100.0 % 100.0 % Cost of goods sold 62.3 % 58.6 % Gross margin 37.7 % 41.4 % Selling and administrative expenses: Selling expenses % % Administrative expenses 8.4 % 9.7 % Total selling and administrative expenses 8.4 % 9.7 % Net operating income 29.3 % 31.7 % Interest expense 1.2 % 1.4 % Net income before taxes 28.1 % 30.3 %