In 2006 Procter & Gamble had net sales of $68,222 and cost of product sold was 33,125. Assume that Procter & Gamble
had a 10% increase in sales in 2007 and that there was no change in costs except for increases associated with the higher volume of sales. C compute the predicted 2007 operating income for Procter & Gamble and its percentage increase. Explain why the percentage increase in income differs from the percentage increase in sales.