Assume the average cost of computer equipment fell 20.9 percent between 2012 and 2013. Let's see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2013.

Required
1. Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and in percentages (rounded to one decimal place). How did the change in computer prices compare to the changes in Computer Tycoon's sales revenues?
2. Conduct a vertical analysis by expressing each line as a percentage of total revenues (rounded to one decimal place). Excluding income tax, interest, and selling, general, and administrative expenses, did Computer Tycoon earn more profit per dollar of sales in 2013 compared to 2012?

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2012 2013 $121,761 Sales Revenues Cost of Goods Sold Grass Profit Selling. General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense $98,913 59,249 71,583 50,178 36,934 474 12,770 5,540 $ 7,230 39,664 36,943 565 2,156 1,024 $ 1,132 Net Income