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McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales ..... $8,000,000 $6,000,000 Cost of goods sold.. Gross margin ... 4,984,000 3,516,000 3,016,000 2,484,000 Selling and administrative expenses: Selling expenses Administrative expenses. 1,480,000 1,092,000 712,000 618,000 1,710,000 Total expenses 2,192,000 824,000 774,000 Net operating income Interest expense .... 96,000 $ 728,000 84,000 $ 690,000 Net income before taxes

McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales ..... $8,000,000 $6,000,000 Cost of goods sold.. Gross margin ... 4,984,000 3,516,000 3,016,000 2,484,000 Selling and administrative expenses: Selling expenses Administrative expenses. 1,480,000 1,092,000 712,000 618,000 1,710,000 Total expenses 2,192,000 824,000 774,000 Net operating income Interest expense .... 96,000 $ 728,000 84,000 $ 690,000 Net income before taxes

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Common-Size Income Statement

A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto:

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.

Required:

1. Express each year’s income statement in common-size percentages. Carry computations to one decimal place.

2. Comment briefly on the changes between the two years.

 

McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales ..... $8,000,000 $6,000,000 Cost of goods sold.. Gross margin ... 4,984,000 3,516,000 3,016,000 2,484,000 Selling and administrative expenses: Selling expenses Administrative expenses. 1,480,000 1,092,000 712,000 618,000 1,710,000 Total expenses 2,192,000 824,000 774,000 Net operating income Interest expense .... 96,000 $ 728,000 84,000 $ 690,000 Net income before taxes
Transcribed Image Text:McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales ..... $8,000,000 $6,000,000 Cost of goods sold.. Gross margin ... 4,984,000 3,516,000 3,016,000 2,484,000 Selling and administrative expenses: Selling expenses Administrative expenses. 1,480,000 1,092,000 712,000 618,000 1,710,000 Total expenses 2,192,000 824,000 774,000 Net operating income Interest expense .... 96,000 $ 728,000 84,000 $ 690,000 Net income before taxes
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