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A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales $ 7,310,000 $ 5,555,600 Cost of goods sold 4,700,000 3,513,500 Gross margin 2,610,000 2,042,100 Selling and administrative expenses: Selling expenses 1,377,000 1,079,500 Administrative expenses 707,500 611,500 Total expenses 2,084,500 1,691,000 Net operating income 525,500 351,100 Interest expense 102,000 87,000 Net income before taxes $ 423,500 $ 264,100 Members of the companys board of directors are surprised to see that net income increased by only $159,400 when sales increased by $1,754,400. 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 100.0 % 100.0 % Cost of goods sold % 63.2 % Gross margin 100.0 % 36.8 % Selling and administrative expenses: Selling expenses % % Administrative expenses % % Total selling and administrative expenses 0.0 % 0.0 % Net operating income 100.0 % 36.8 % Interest expense % % Net income before taxes 100.0 % 36.8 %

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