Vertical Analysis of Income StatementFor 20Y2, Fielder Industries Inc. initiated a sales promotion campaign that included the expenditure of an additional $40,000 for advertising. At the end of theyear, Leif Grando, the president, is presented with the following condensed comparative income statement:3. PR.14-05BFielder Industries Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y120Y2 20Y1Sales $1,300,000 $1,180,000Cost of goods sold 682,500 613,600Gross profit $617,500 $566,400Selling expenses $260,000 $188,800Administrative expenses 169,000 177,000Total operating expenses $429,000 $365,800Income from operations $188,500 $200,600Other income 78,000 70,800Income before income tax $266,500 $271,400Income tax expense 117,000 106,200Net income $149,500 $165,200Required:1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. Round toone decimal place. Enter all amounts as positive numbers.Fielder Industries Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y120Y2 Amount 20Y2 Percent 20Y1 Amount 20Y1 PercentSales $1,300,000 % $1,180,000 %Cost of goods sold 682,500 % 613,600 %Gross profit $617,500 % $566,400 %Selling expenses 260,000 % 188,800 %Administrative expenses 169,000 % 177,000 %Total operating expenses $429,000 % $365,800 %Income from operations $188,500 % $200,600 %Other income 78,000 % 70,800 %Income before income tax $266,500 % $271,400 %Income tax expense 117,000 % 106,200 %Net income $149,500 % $165,200 %2. The net income as a percent of sales has. All the costs and expenses, other than selling expenses, have maintained their approximate cost as a percent of sales relationship between 20Y1 and 20Y2.Selling expenses as a percent of sales, however, have . Apparently, the new advertising campaign been successful.The increased expense produced sufficient sales to maintain relative profitability. Thus, selling expenses as a percent of sales have
Vertical Analysis of Income Statement
For 20Y2, Fielder Industries Inc. initiated a sales promotion campaign that included the expenditure of an additional $40,000 for advertising. At the end of the
year, Leif Grando, the president, is presented with the following condensed comparative income statement:
3. PR.14-05B
Fielder Industries Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Y2 20Y1
Sales $1,300,000 $1,180,000
Cost of goods sold 682,500 613,600
Gross profit $617,500 $566,400
Selling expenses $260,000 $188,800
Administrative expenses 169,000 177,000
Total operating expenses $429,000 $365,800
Income from operations $188,500 $200,600
Other income 78,000 70,800
Income before income tax $266,500 $271,400
Income tax expense 117,000 106,200
Net income $149,500 $165,200
Required:
1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. Round to
one decimal place. Enter all amounts as positive numbers.
Fielder Industries Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Y2 Amount 20Y2 Percent 20Y1 Amount 20Y1 Percent
Sales $1,300,000 % $1,180,000 %
Cost of goods sold 682,500 % 613,600 %
Gross profit $617,500 % $566,400 %
Selling expenses 260,000 % 188,800 %
Administrative expenses 169,000 % 177,000 %
Total operating expenses $429,000 % $365,800 %
Income from operations $188,500 % $200,600 %
Other income 78,000 % 70,800 %
Income before income tax $266,500 % $271,400 %
Income tax expense 117,000 % 106,200 %
Net income $149,500 % $165,200 %
2. The net income as a percent of sales has
. All the costs and expenses, other than selling expenses, have maintained their approximate cost as a percent of sales relationship between 20Y1 and 20Y2.
Selling expenses as a percent of sales, however, have . Apparently, the new advertising campaign been successful.
The increased expense produced sufficient sales to maintain relative profitability. Thus, selling expenses as a percent of sales have
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