Comparative income statements for Xenon Corporation for 2011 and 2010 follow.

1. Prepare common-size income statements for Xenon Corporation for 2011 and 2010.
2. Return on sales for Xenon is lower in 2011 than in 2010. What expense or expenses are causing this lowerprofitability?

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2011 2010 Sales Cost of goods sold Gross profit Selling and general expenses $950,000 $600,000 325.000 $355.000 $275.000 94,000 595.000 115,000 Operating income Interest expense Income before income taxes Income taxes $240.000$181.000 35,000 $195,000 $146,000 57,000 45,000 72,000 $123,000 123000 9.000 Net income