Revenue and expense data for the current calendar year for Tannenhill Company an

Question

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.

Net income

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.

4%

%

Tannenhill
Company Electronics
Industry
Average Sales $1,560,000 100 % Cost of goods sold 1,076,400 74 Gross profit $483,600 26 % Selling expenses $280,800 14 % Administrative expenses 109,200 6 Total operating expenses $390,000 20 % Operating income $93,600 6 % Other income 31,200 2 $124,800 8 % Other expense 15,600 1 Income before income tax $109,200 7 % Income tax expense 46,800 3

Net income

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.

Common-Sized Income Statement For the Year Ended December 31 Tannenhill Company Amount Tannenhill Company Percent Electronics Industry Average Sales $1,560,000 % 100.0% Cost of goods sold 1,076,400 % 74% Gross profit $483,600 % 26% Selling expenses $280,800 % 14% Administrative expenses 109,200 % 6% Total operating expenses $390,000 % 20% Operating income $93,600 % 6% Other income 31,200 % 2% $124,800 % 8% Other expense 15,600 % 1% Income before income tax $109,200 % 7% Income tax expense 46,800 % 3% Net income $62,400 %

4%

$62,400 4

%

Explanation / Answer

Tannenhill Company

Common sized income statement comparing the results of operations for the company with the industry average:

Tannenhill Company

Tannenhill Company Percent

Electronics Industry Average

Sales

$1,560,000

100%

100%

Cost of goods sold

$1,076,400

69%

74%

Gross profit

$483,600

31%

26%

selling expenses

$280,800

18%

14%

Administrative expenses

$109,200

7%

6%

Total operating expenses

$390,000

25%

20%

Operating income

$93,600

6%

6%

Other income

$31,200

2%

2%

$124,800

8%

7%

Other expense

$15,600

1%

1%

Income before income tax

$109,200

7%

7%

income tax expense

$46,800

3%

3%

net income

$62,400

4%

4%

Common sized income statement comparing the results of operations for the company with the industry average:

Tannenhill Company

Tannenhill Company Percent

Electronics Industry Average

Sales

$1,560,000

100%

100%

Cost of goods sold

$1,076,400

69%

74%

Gross profit

$483,600

31%

26%

selling expenses

$280,800

18%

14%

Administrative expenses

$109,200

7%

6%

Total operating expenses

$390,000

25%

20%

Operating income

$93,600

6%

6%

Other income

$31,200

2%

2%

$124,800

8%

7%

Other expense

$15,600

1%

1%

Income before income tax

$109,200

7%

7%

income tax expense

$46,800

3%

3%

net income

$62,400

4%

4%

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