Question - Common-Size Income Statement
A comparative income statement is given below for McKenzie Sales Ltd., of Toronto
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McKenzie Sales, Ltd. Comparative Income Statement
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This Year
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Last Year
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Sales
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$7,370,00
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$5,601,200
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Cost of goods sold
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4,610,000
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3,507,000
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Gross margin
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2,760,000
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2,094,200
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Selling and administrative expenses:
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Selling expenses
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1,382,000
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1,074,500
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Administrative expenses
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706,000
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609,000
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Total expenses
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2,088,000
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1,683,500
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Net operating income
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672,000
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410,700
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Interest expense
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102,000
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93,000
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Net income before taxes
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$570,000
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$317,700
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Members of the company's board of directors are surprised in see that net income increases by only $252,300 when sales increased by$1,768,800.
Required - Express each year's income statement in common size percentages.