ACC 105

Revenue and expense data for the current calendar year for Lyons Electronics Company and for the electronics industry are as follows. Lyons Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages. Lyons Electronics Electronics Industry Average Company Sales $ 7,500,000 100 % Cost of goods sold (4,125,000) (61.0) Gross profit $3,375,000 39.0 % Selling expenses (23.0) % Administrative expenses $(2,250,000) (525,000) $(2,775,000) (10.0) (33.0) % Total operating expenses Operating income $600,000 6.0 % Other revenue and expense: Other revenue 30,000 3.0 Other expense $(7,500) (1.0) Income before income tax $ 622,500 8.0 % Income tax (187,500) (2.5) Net income $435,000 5.5 % a. Prepare a common-sized income statement comparing the results of operations for Lyons Electronics Company with the industry average. If required, round percentages to one decimal place. Lyons Electronics Company Common-Sized Income Statement Sales Lyons Electronics Lyons Electronics Company Amount Company Percent $7,500,000 100 % (4,125,000) 58.8 % x Electronics Industry Average 100.0% (61.0% Cost of goods sold Gross profit $3,375,000 100 % 39.0% Selling expenses (23.0)% $(2,250,000) (525,000) Administrative expenses (10.0% Total operating expenses $(2,775,000) (33.0)% $600,000 6.0% Operating income Other revenue and expense: Other revenue 3.0% (1.0% Other expense Income before income tax 30,000 (7,500) $622,500 (187,500) $435,000 8.0% Income tax expense (2.5)% Net income 5.5%