Here are the comparative income statements of Erik Corporation.

ERIK CORPORATION Comparative Income Statements For the Years Ended December 31 2007 Net sales $572,000 Cost of goods sold 477,000 Gross profit $ 95,000 Operating expenses 60,000 Net income $ 35,000 Instructions

(a) Prepare a horizontal analysis of the income statement data for Erik Corporation us-

2006

$520,000 450,000

$ 70,000 45,000

$ 25,000 ing 2006 as a base. (Show the amounts of increase or decrease.)

(b) Prepare a vertical analysis of the income statement data for Erik Corporation for both years.