A comparative income statement is given below for McKenzie Sales, Limited, of Toronto: McKenzie Sales, Limited Comparative Income Statement Sales This Year $ 7,370,000 Last Year $5,601,200 Cost of goods sold Gross margin 4,700,000 2,670,000 3,506,000 Selling and administrative expenses: Selling expenses Total expenses Net operating income. Administrative expenses 2,095,200 1,379,000 1,072,000 705,500 615,500 2,084,500 1,687,500 Interest expense Net income before taxes 585,500 105,000 407,700 92,000 $ 480,500 $ 315,700 Members of the company's board of directors are surprised to see that net income increased by only $164,800 when sales increased by $1,768,800.