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Assume the average cost of computer equipment fell 22.3 percent between 2012 and 2013. Let's see whether these changes are reflected in the income statement

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Assume the average cost of computer equipment fell 22.3 percent between 2012 and 2013. Let's see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2013 Sales Revenues Cost of Goods Sold 2013 $ 97,500 60,000 2012 $122,469 73,481 37,500 Gross Profit Selling, General, and Administrative Expenses Interest Expense 48,988 35,200 35,200 400 320 Income before Income Tax Expense Income Tax Expense 1,900 800 I 13,468 4,907 Net Income $ 1.100 $ 8.561 Required: 1-a. Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and in percentages. (Round your "Percentage" to 1 decimal place. Any decrease in amounts should be indicated with minus sign) COMPUTER TYCOON, INC. Vertical Analysis of Income Statements For the Years Ended December 31 Change in Dollars Percentage % Sales revenues Costs of goods sold Gross profit Selling, general, and Administrative expenses Interest expense Income before income tax expenso Income tax expense Net income 2013 97,500 $ 60,000 37,506 35,200 400 1,900 800 2012 122,469 73,481 48,988 35,200 320 13,468 4,907 8,561 % % % 1,100 $ % 2-a. Conduct a vertical analysis by expressing each line as a percentage of total revenues. (Round your answers to 1 decimal place. Input all amounts as positive values.) % COMPUTER TYCOON, INC. Vertical Analysis of Income Statements For the Years Ended December 31 2013 2012 Sales revenues $ 97,500 % $ 122,469 Costs of goods sold 60,000 % 73,481 Gross profit 37,500 % 48,988 Selling, general, and Administrative expenses 35,200 % 35,200 Interest expense 400 % 320 Income before income tax expense 1,900 % 13,468 Income tax expense 800 % 4,907 Net income $ 1,100 % $ 8,561 % % % % % % % $ 2-b. Excluding income tax, interest, and selling, general, and administrative expenses, did Computer Tycoon earn more profit per dollar of sales in 2013 compared to 2012? O Yes

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