At the beginning of 1994, Congress enacted a 10% increase in the feder

Answer (D): While this isn't the clearest explanation, it's the most satisfactory. It can be conjectured that the rising incomes of the majority of the customer base allowed for the company to sell more of (or raise prices on) its products - thereby increasing the top line -> extending to the bottom line despite increases in expenses.

(A) This would make sense if we could conclude that the cost of procuring cows fell in the current year (and therefore total expenditures fell). However, there is no evidence to suggest that this is so.
(B) While this may be true, it wouldn't negate the fact that increasing salary expenses would in theory lower net income.
(C) This implies that the company could have planned for the rising expenditures, and adjusted accordingly. However, its too far a stretch to conclude that because the salary increases were budgeted for, it did not raise overall expenses (thereby lowering net income).
(E) The implication is that most of these employees earn minimum wage - no new information provided.

My solution requires a knowledge of some basic supply/demand theory, which may make it incorrect, as the GMAT requires that you have no previous knowledge of the market or economics.