Question

In: Accounting

Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics...

Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. 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 revenue

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.
B. As far as the data permit, comment on significant relationships revealed by the comparisons.

Income Statement

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. Percentage sign will appear automatically.

Tannenhill Company

Common-Sized Income Statement

For the Year Ended December 31

1

Tannenhill Company

Tannenhill Company

Electronics Industry Average

2

Amount

Percent

3

Sales

$4,920,000.00

100.0%

4

Cost of goods sold

2,533,800.00

56.5

5

Gross profit

$2,386,200.00

43.5%

6

Selling expenses

$1,328,400.00

24.0

7

Administrative expenses

787,200.00

14.0

8

Total operating expenses

$2,115,600.00

38.0%

9

Income from operations

$270,600.00

5.5%

10

Other revenue

120,000.00

2.4

11

$390,600.00

7.9%

12

Other expense

74,000.00

1.5

13

Income before income tax

$316,600.00

6.4%

14

Income tax expense

80,000.00

1.6

15

Net income

$236,600.00

4.8%

Solutions

Expert Solution

Tannenhill Company

Common-Sized Income Statement

For the Year Ended December 31

1

Tannenhill Company

Tannenhill Company

Electronics Industry Average

2

Amount

Percent

3

Sales

$4,920,000.00

100%

100.0%

4

Cost of goods sold

2,533,800.00

51.5%

(2433800/4920000*100)

56.5

5

Gross profit

$2,386,200.00

48.5%

(2386200/4920000*100)

43.5%

6

Selling expenses

$1,328,400.00

27%

(1328400/4920000*100)

24.0

7

Administrative expenses

787,200.00

16%

(787200/4920000*100)

14.0

8

Total operating expenses

$2,115,600.00

43%

(2115600/4920000*100)

38.0%

9

Income from operations

$270,600.00

5.5%

(270600/4920000*100)

5.5%

10

Other revenue

120,000.00

2.44%

(120000/4920000*100)

2.4

11

$390,600.00

7.94%

(390600/4920000*100)

7.9%

12

Other expense

74,000.00

1.5%

(74000/4920000*100)

1.5

13

Income before income tax

$316,600.00

6.44%

(316600/4920000*100)

6.4%

14

Income tax expense

80,000.00

1.63%

(80000/4920,000*100)

1.6

15

Net income

$236,600.00

4.81%

(236600/4920,000*100)

4.8%


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