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Date Submitted: 03/01/2015 01:32 PM
Exercise 15-1 Common-Size Income Statement [LO1]
A comparative income statement is given below for Ryder Company:
Ryder Company
Comparative Income Statement
This Year Last Year
Sales $ 5,000,000 $ 4,000,000
Cost of goods sold 3,160,000 2,400,000
Gross margin
1,840,000
1,600,000
Selling and administrative expenses:
Selling expenses 900,000 700,000
Administrative expenses 680,000 584,000
Total selling and administrative expenses 1,580,000 1,284,000
Net operating income 260,000 316,000
Interest expense 70,000 40,000
Net income before taxes $
190,000
$
276,000
The president is concerned that net income is down even though sales have increased during the year. The president is also concerned that administrative expenses have increased because the company made a concerted effort to cut waste out of the organization.
Required:
1.
Express each year's income statement in common-size percentages. (Input all amounts as positive values. Round your answers to 1 decimal place. Omit the "%" sign in your response.)
This Year Last Year
Sales 100.0 correct % 100.0 correct %
Cost of goods sold 63.2 correct % 60.0 correct %
Gross margin 36.8 correct % 40.0 correct %
Selling and administrative expenses:
Selling expenses 18.0 correct % 17.5 correct %
Administrative expenses 13.6 correct % 14.6 correct %
Total selling and administrative expenses 31.6 correct % 32.1 correct %
Net operating income 5.2 correct % 7.9 correct %
Interest expense 1.4 correct % 1.0 correct %
Net income before taxes 3.8 correct % 6.9 correct %