Question

A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year $5,570,800 3,516,000 2,054,800 $7,330,000 4,590,000 2,740,000 Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses 1,074,500 611,000 1,381,000 710,500 2,091,500 648,500 1,685,500 369,300 84,000 Total expenses Net operating income Interest expense 102,000 $ $ 285,300 546,500 Net income before taxes Members of the company's board of directors are surprised to see that net income increased by only $261,200 when sales increased by $1,759,200.

Answer 1

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An This year Last year Sales Cost 100% 62.6% of goods sold 1007 63.1% 37.4% 36.9%. Gross selling margin and admin Expenses selong Expenses 18.8% 19.3% Admin Expenses 9.7% 11% Total selling and 28.5% 30.3% admin Expenses Income net operating Interest Expense 8.9% (374-28.5) 1.47. 7.5% (8.9-1.4) 6.6% 8619-30.3) 1.6% 5% (6.6-1.6) net Income before taxes

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