Question

Common-Sized Income Statement

Revenue and expense data for the current calendar year forTannenhill Company and for the electronics industry are as follows.Tannenhill’s data are expressed in dollars. The electronicsindustry averages are expressed in percentages.

	Tannenhill Company			Electronics Industry Average
Sales	$2,240,000			100	%
Cost of goods sold	1,478,400			71
Gross profit	$761,600			29	%
Selling expenses	$448,000			16	%
Administrative expenses	179,200			7
Total operating expenses	$627,200			23	%
Operating income	$134,400			6	%
Other revenue	44,800			2
	$179,200			8	%
Other expense	22,400			1
Income before income tax	$156,800			7	%
Income tax expense	67,200			4
Net income	$89,600			3	%

a. Prepare a common-sized income statementcomparing the results of operations for Tannenhill Company with theindustry average. If required, round percentages to one decimalplace. Enter all amounts as positive numbers.

Tannenhill Company
Common-Sized Income Statement
Forthe Year Ended December 31
	Tannenhill Company Amount	Tannenhill Company Percent	Electronics Industry Average
Sales	$2,240,000	%	100.0%
Cost of goods sold	1,478,400	%	71%
Gross profit	$761,600	%	29%
Selling expenses	$448,000	%	16%
Administrative expenses	179,200	%	7%
Total operating expenses	$627,200	%	23%
Income from operations	$134,400	%	6%
Other revenue	44,800	%	2%
	$179,200	%	8%
Other expense	22,400	%	1%
Income before income tax	$156,800	%	7%
Income tax expense	67,200	%	4%
Net income	$89,600	%	3%

b. The company is managing the cost ofmanufacturing product than the industry, and has slightly sellingand administrative expenses relative to the industry. The combinedimpact causes net income as a percent of sales to be than theindustry average.