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 $8,000,000 4,984,000 3,016,000 Last Year $6,000,000 3,516,000 2,484,000 Sales Cost of goods sold ..... Gross margin ......... Selling and administrative expenses: Selling expenses .... Administrative expenses... Total expenses ....... Net operating income .. Interest expense ....... Net income before taxes ..... 1,480,000 712,000 2,192,000 824,000 96,000 $ 728,000 1,092,000 618,000 1,710,000 774,000 84,000 $ 690,000 Members of the company's board of directors are surprised to see that net income increased by only $38,000 when sales increased by $2,000,000. Required: 1. Express each year's income statement in common-size percentages. Carry computations to one decimal place. 2. Comment briefly on the changes between the two years