Exercise 15-1 Common-Size Income Statement [LO15-1] A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales $ 7,340,000 $ 5,578,400 Cost of goods sold 4,780,000 3,514,500 Gross margin 2,560,000 2,063,900 Selling and administrative expenses: Selling expenses 1,370,000 1,077,000 Administrative expenses 702,500 611,000 Total expenses 2,072,500 1,688,000 Net operating income 487,500 375,900 Interest expense 98,000 87,000 Net income before taxes $ 389,500 $ 288,900 Members of the companys board of directors are surprised to see that net income increased by only $100,600 when sales increased by $1,761,600.