Dr. Gupta Diagnostics' income statement for 2015 is as follows:
Sales ................. . . .................................$2,000,000
Cost of goods sold ........... . . . ............... . 1,400,000
Gross profit. ........................ . ... . ... ........... 600,000
Sell ing and administrative expense. ...........300,000
Operating profit. ........................ . . ..............300,000
Interest expense. ...........................................50,000
Income before taxes .......... . . . .. .. . ....... . .250,000
Taxes (30%) ................. . .. .. .. . ... . .. . .........75,000
Income after taxes ....................... . . .........$ 175,000

a. Compute the profit margin in 2015.
b. Assume in 2016 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. Once again, assume a tax rate of 30 percent. What are the income after taxes and profit margin in 2016?