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A comparative income statement is given below for Ryder Company: Ryder Company Comparative Income Statement This Year Last Year Sales $ 5,000,000 $ 4,000,000 Cost
A comparative income statement is given below for Ryder Company: |
Ryder Company Comparative Income Statement | ||||||
This Year | Last Year | |||||
Sales | $ | 5,000,000 | $ | 4,000,000 | ||
Cost of goods sold | 3,160,000 | 2,400,000 | ||||
Gross margin | 1,840,000 | 1,600,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 900,000 | 700,000 | ||||
Administrative expenses | 680,000 | 584,000 | ||||
Total selling and administrative expenses | 1,580,000 | 1,284,000 | ||||
Net operating income | 260,000 | 316,000 | ||||
Interest expense | 70,000 | 40,000 | ||||
Net income before taxes | $ | 190,000 | $ | 276,000 | ||
The president is concerned that net income is down even though sales have increased during the year. The president is also concerned that administrative expenses have increased because the company made a concerted effort to cut waste out of the organization.
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