USING COMPARATIVE COMPONENT PERCENTAGE STATEMENTS. The following income statement and component percentage data are available for Robbins Audio Products:

REQUIRED:
1. Suggest why net income declined from $273,200 to $41,600 while the cost of goods sold percentage decreased each year and selling and administrative expenses remained nearly constant.
2. What could cause sales to decline while the gross margin percentage increases?
Pott

Transcribed Image Text:

ROBBINS AUDIO PRODUCTS Comparative Statements of Income YEAR ENDED JUNE 30 1995 1994 1993 (in thousands) Sales... AMOUNT % AMOUNT % AMOUNT % $2,970.0 100.0 $3,465.0 100.0 $3,960.0 100.0 Other income 23.7 .8 34.6 1.0 39.6 1.0. 2,993.7 100.8 3,499.6 101.0 3,999.6 101.0 Cost and expenses: Cost of goods sold 1,303.8 43.9 1,566.2 45.2 1,920.6 48.5 Selling and administrative 1,571.1 52.9 1,593.9 46.0 1,564.2 39.5 Interest 62.4 2.1 65.8 1.9 59.4 1.5 2,937.3 98.9 3,225.9 93.1 3,544.2 89,5 Income before income taxes 56.4 1.9 273.7 7.9 455.4 11.5 Income taxes expense 14.8 5 107.4 3.1 182.2 4.6 Net income $ 41.6 1.4 $ 166.3 4.8 $ 273.2 6.9