Question: A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd. Comparative Income StatementThis YearLast YearSales$7,320,000$5,563,200Cost of goods sold4,660,0003,506,500Gross margin2,660,0002,056,700Selling

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

McKenzie Sales, Ltd.

Comparative Income StatementThis YearLast YearSales$7,320,000$5,563,200Cost of goods sold4,660,0003,506,500Gross margin2,660,0002,056,700Selling and administrative expenses:Selling expenses1,386,0001,074,000Administrative expenses709,000613,000Total expenses2,095,0001,687,000Net operating income565,000369,700Interest expense99,00094,000Net income before taxes$466,000$275,700

Members of the companys board of directors are surprised to see that net income increased by only $190,300 when sales increased by $1,756,800.

Required:1.Express each year's income statement in common-size percentages.

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