1. The income statements for Mavis Manufacturing Inc. are provided for two recent years. 2022 2021 Revenue $ 850,000 $ 750,000 Cost of goods sold 340,000 300,000 Gross profit 510,000 450,000 Expenses Salaries 221,000 165,000 Amortization Expense 37,500 37,500 Other Operating Expenses 161,500 142,500 Total Operating Expense 420,000 345,000 Income from Operations 90,000 105,000 Interest Expense (15,000) (15,000) Income tax expense (22,500) (27,000) Net Income $ 52,500 $ 63,000 a) using the above information to prepare a vertical analysis for Mavis b) using the analysis completed in part (a), identify the reason for Mavis's decreasing net income at the same time that revenue increases.
1. The income statements for Mavis Manufacturing Inc. are provided for two recent years.
2022 2021
Revenue $ 850,000 $ 750,000
Cost of goods sold 340,000 300,000
Gross profit 510,000 450,000
Expenses
Salaries 221,000 165,000
Amortization Expense 37,500 37,500
Other Operating Expenses 161,500 142,500
Total Operating Expense 420,000 345,000
Income from Operations 90,000 105,000
Interest Expense (15,000) (15,000)
Income tax expense (22,500) (27,000)
Net Income $ 52,500 $ 63,000
a) using the above information to prepare a vertical analysis for Mavis
b) using the analysis completed in part (a), identify the reason for Mavis's decreasing net income at the same time that revenue increases.
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