Common-Size Income Statement Comparative income statements for Callister Company for 2009 and 2008 are given below.

1. Prepare common-size income statements for Callister Company for 2009 and 2008.
2. The profit margin for Callister is lower in 2009 than in 2008. What expense or expenses are causing this lower profitability?

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2009 2008 Sales $1,600,000 $900,000 Cost of goods sold 1,020,000 Gross profit. $ 580,000 Selling and administrative expenses 200,000 Operating income $ 380,000 Interest expense Income before taxes Income tax expense Net income 80,000 $ 300,000 480,000 $420,000 160,000 $260,000 60,000 $200,000 90,000 60,000 $ 210,000 $140,000