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Common-Sized Income Statement

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

	Tannenhill Company			Electronics Industry Average
Sales	$1,200,000			100	%
Cost of goods sold	792,000			72
Gross profit	$408,000			28	%
Selling expenses	$240,000			15	%
Administrative expenses	96,000			7
Total operating expenses	$336,000			22	%
Operating income	$72,000			6	%
Other revenue	24,000			2
	$96,000			8	%
Other expense	12,000			1
Income before income tax	$84,000			7	%
Income tax expense	36,000			5
Net income	$48,000			2	%

Question Content Area

a. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

Tannenhill Company Common-Sized Income Statement For the Year Ended December 31

	Tannenhill Company Amount	Tannenhill Company Percent	Electronics Industry Average
Sales	$1,200,000	fill in the blank 4fe647042fd003e_1%	100.0%
Cost of goods sold	792,000	fill in the blank 4fe647042fd003e_2%	72%
Gross profit	$408,000	fill in the blank 4fe647042fd003e_3%	28%
Selling expenses	$240,000	fill in the blank 4fe647042fd003e_4%	15%
Administrative expenses	96,000	fill in the blank 4fe647042fd003e_5%	7%
Total operating expenses	$336,000	fill in the blank 4fe647042fd003e_6%	22%
Income from operations	$72,000	fill in the blank 4fe647042fd003e_7%	6%
Other revenue	24,000	fill in the blank 4fe647042fd003e_8%	2%
	$96,000	fill in the blank 4fe647042fd003e_9%	8%
Other expense	12,000	fill in the blank 4fe647042fd003e_10%	1%
Income before income tax	$84,000	fill in the blank 4fe647042fd003e_11%	7%
Income tax expense	36,000	fill in the blank 4fe647042fd003e_12%	5%
Net income	$48,000	fill in the blank 4fe647042fd003e_13%	2%

Question Content Area

b. The company is managing the cost of manufacturing product

betterworse

than the industry, and has slightly

higherlower

selling and administrative expenses relative to the industry. The combined impact causes net income as a percent of sales to be

betterworse

than the industry average.

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