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In: Accounting

Common-Sized Income Statement Revenue and expense data for the current calendar year for Tannenhill Company and...

Common-Sized Income Statement

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.


Tannenhill
Company
Electronics
Industry
Average
Sales $4,000,000 100.0 %
Cost of goods sold (2,120,000) (60.0)
Gross profit $1,880,000 40.0 %
Selling expenses $(1,080,000) (24.0) %
Administrative expenses (640,000) (14.0)
Total operating expenses $(1,720,000) (38.0) %
Operating income $160,000 2.0 %
Other revenue and expense:
    Other revenue 120,000 3.0
    Other expense (80,000) (2.0)
Income before income tax expense $200,000 3.0 %
Income tax expense (80,000) (2.0)
Net income $120,000 1.0 %

a. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average.

Tannenhill Company
Common-Sized Income Statement
For the Year Ended December 31
Tannenhill
Company
Amount
Tannenhill
Company
Percent
Electronics
Industry
Average
Sales $4,000,000 % 100%
Cost of goods sold (2,120,000) (60)
Gross profit $1,880,000 % 40%
Selling expenses $(1,080,000) % (24)%
Administrative expenses (640,000) (14)
Total operating expenses $(1,720,000) % (38)%
Operating income $160,000 % 2%
Other revenue and expense:
Other revenue 120,000 3
Other expense (80,000) (2)
Income before income tax expense $200,000 % 3%
Income tax expense (80,000) (2)
Net income $120,000 1

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Expert Solution

Answer

Tannenhill Company
Common-Sized Income Statement
For the Year Ended December 31
Tannenhill Company Tannenhill Company Electronics Industry Average
Amount Percent
Sales $                4,000,000 100.00% 100%
Cost of goods sold $               (2,120,000) -53.00% -60%
Gross profit $                1,880,000 47.00% 40%
Selling expenses $               (1,080,000) -27.00% -24%
Administrative expenses $                  (640,000) -16.00% -14%
Total operating expenses $               (1,720,000) -43.00% -38%
Operating income $                    160,000 4.00% 2%
Other revenue and expense:
Other revenue $                    120,000 3.00% 3%
Other expense $                    (80,000) -2.00% -2%
Income before income tax expense $                    200,000 5.00% 3%
Income tax expense $                    (80,000) -2.00% 2%
Net income $                    120,000 3.00% 1%

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