Question

Instructions

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

1		Tannenhill Company	Electronics Industry Average
2	Sales	$4,920,000.00	100.0%
3	Cost of goods sold	2,533,800.00	56.5
4	Gross profit	$2,386,200.00	43.5%
5	Selling expenses	$1,328,400.00	24.0%
6	Administrative expenses	787,200.00	14.0
7	Total operating expenses	$2,115,600.00	38.0%
8	Operating income	$270,600.00	5.5%
9	Other income	120,000.00	2.4
10		$390,600.00	7.9%
11	Other expense	74,000.00	1.5
12	Income before income tax	$316,600.00	6.4%
13	Income tax expense	80,000.00	1.6
14	Net income	$236,600.00	4.8%

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

Answer 1

Common-sized income statement
For the year ended December 31
	Tannenhill Company	Tannenhill Company Percent	Electronics Industry Average
Sales	4920000	100.0%	100.0%
Cost of goods sold	2533800	51.5%	56.5%
Gross profit	2386200	48.5%	43.5%
Selling expenses	1328400	27.0%	24.0%
Administrative expenses	787200	16.0%	14.0%
Total operating expenses	2115600	43.0%	38.0%
Operating income	270600	5.5%	5.5%
Other income	120000	2.4%	2.4%
	390600	7.9%	7.9%
Other expense	74000	1.5%	1.5%
Income before income tax	316600	6.4%	6.4%
Income tax expense	80000	1.6%	1.6%
Net income	236600	4.8%	4.8%