5.00 points E13-3 Preparing and Interpreting a Schedule for Horizontal and Verti

Question

5.00 points E13-3 Preparing and Interpreting a Schedule for Horizontal and Vertical Analyses [LO 13-2, 13-3, 13-5) According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 8.1 percent between 2012 and 2013 Required: 1. Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and in percentages for the income statoment of Computer Tycoon Inc. for tha year ended December 31, 2013. (Decreases should be indicated by a minus sign. Round your percontage answers to 1 decimal placo.) COMPUTER TYCOON, INC For the Year Ended December 31 Change in 2012 Salas Ravonuo of Goods Sold 63,500 74,300 Gross Proit 56.200 General, and Administrative Expense ntoreat Exponso Income before Income Tax Expense Income Tax Expense 6,230 17.290 5.700 2-a. Conduct a vertical analysis by expressing each line a8 a percentage of total revenues·(Round your porcentage answers to 1 docimal place.) For the Year Ended December 31 Sales Revenue Cost of Goods Sod Gross Proit Selling, General, and Administrative Expenses36,700 nterest Exponso Income before Income Tax Expense Income Tax Expense 74.300 58,200 38,400 63.500 43.500 570 6,.230 1.500 S 4.730 17.290 5.700 % | S 11.590

Explanation / Answer

2013 2012 Dollars Percentage Sales Revenue 107000 130500 -23500 -18.0% Cost of Goods Sold 63500 74300 -10800 -14.5% Gross Profit 43500 56200 -12700 -22.6% Selling, General, and Administrative Expenses 36700 38400 -1700 -4.4% Interest Expense 570 510 60 11.8% Income before Income Tax Expense 6230 17290 -11060 -64.0% Income Tax Expense 1500 5700 -4200 -73.7% Net Income 4730 11590 -6860 -59.2% 2 2013 % 2012 % Sales Revenue 107000 100.0% 130500 100.0% Cost of Goods Sold 63500 59.3% 74300 56.9% Gross Profit 43500 40.7% 56200 43.1% Selling, General, and Administrative Expenses 36700 34.3% 38400 29.4% Interest Expense 570 0.5% 510 0.4% Income before Income Tax Expense 6230 5.8% 17290 13.2% Income Tax Expense 1500 1.4% 5700 4.4% Net Income 4730 4.4% 11590 8.9%

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