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 Sales $6,000,000 3,516,000 2,484,000 Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total expenses Net operating income Interest expense 1,092,000 618,000 1,710,000 774,000 1,480,000 712,000 2,192,000 824,000 96,000 84,000 $ 690,000 Net income before taxes $ 728,000 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. Reguired:-
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 Sales $6,000,000 3,516,000 2,484,000 Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total expenses Net operating income Interest expense 1,092,000 618,000 1,710,000 774,000 1,480,000 712,000 2,192,000 824,000 96,000 84,000 $ 690,000 Net income before taxes $ 728,000 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. Reguired:-
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto:
McKenzie Sales, Ltd.
Comparative Income Statement
This Year
Last Year
$6,000,000
3,516,000
2,484,000
Sales
$8,000, 000
4,984,000
Cost of goods sold
Gross margin
Selling and administrative expenses:
Selling expenses
Administrative expenses
3,016,000
1,480,000
1,092,000
712,000
2,192,000
618,000
1,710,000
774,000
84,000
Total expenses
Net operating income
Interest expense
824,000
96,000
$ 728,000
Net income before taxes
$ 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 $2,000,00O.
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
%
%
Cost of goods sold
%
%
Gross margin
%
%
Selling and administrative expenses:
Selling expenses
%
%
%
Administrative expenses
%
Total selling and administrative expenses
%
Net operating income
%
Interest expense
%
%
Net income before taxes
%
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3cadaab7-0242-405d-ab75-d1a15c225b30%2F202691a2-1e41-4d8c-9f55-cabc78c0b0bd%2Fu1djx68_processed.png&w=3840&q=75)
Transcribed Image Text:A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto:
McKenzie Sales, Ltd.
Comparative Income Statement
This Year
Last Year
$6,000,000
3,516,000
2,484,000
Sales
$8,000, 000
4,984,000
Cost of goods sold
Gross margin
Selling and administrative expenses:
Selling expenses
Administrative expenses
3,016,000
1,480,000
1,092,000
712,000
2,192,000
618,000
1,710,000
774,000
84,000
Total expenses
Net operating income
Interest expense
824,000
96,000
$ 728,000
Net income before taxes
$ 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 $2,000,00O.
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
%
%
Cost of goods sold
%
%
Gross margin
%
%
Selling and administrative expenses:
Selling expenses
%
%
%
Administrative expenses
%
Total selling and administrative expenses
%
Net operating income
%
Interest expense
%
%
Net income before taxes
%
%
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