Exercise 14-1 Common-Size Income Statement [LO14-1]

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

McKenzie Sales, Ltd. Comparative Income Statement
	This Year			Last Year
Sales	$	7,300,000		$	5,548,000
Cost of goods sold		4,770,000			3,513,000
Gross margin		2,530,000			2,035,000
Selling and administrative expenses:
Selling expenses		1,371,000			1,077,500
Administrative expenses		708,500			608,500
Total expenses		2,079,500			1,686,000
Net operating income		450,500			349,000
Interest expense		104,000			87,000
Net income before taxes	$	346,500		$	262,000

Members of the companys board of directors are surprised to see that net income increased by only $84,500 when sales increased by $1,752,000.

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).)

This Year		Last Year
Sales		%		%
Cost of goods sold		%		%
Gross margin		%		%
Selling and administrative expenses:
Selling expenses		%		%
Administrative expenses		%		%
Total selling and administrative expenses		%		%
Net operating income		%		%
Interest expense		%		%
Net income before taxes		%		%