Common-Sized Income Statement

Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. Tannenhills data are expressed in dollars. The electronics industry averages are expressed in percentages.

	Tannenhill Company			Electronics Industry Average
Sales	$1,250,000			100	%
Cost of goods sold	662,500			56
Gross profit	$587,500			44	%
Selling expenses	$375,000			27	%
Administrative expenses	137,500			11
Total operating expenses	$512,500			38	%
Operating income	$75,000			6	%
Other income	25,000			2
	$100,000			8	%
Other expense	12,500			1
Income before income tax	$87,500			7	%
Income tax expense	37,500			3
Net income	$50,000			4	%

a. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

Tannenhill Company
Common-Sized Income Statement
For the Year Ended December 31
	Tannenhill Company Amount	Tannenhill Company Percent	Electronics Industry Average
Sales	$1,250,000	%	100.0%
Cost of goods sold	662,500	%	56%
Gross profit	$587,500	%	44%
Selling expenses	$375,000	%	27%
Administrative expenses	137,500	%	11%
Total operating expenses	$512,500	%	38%
Operating income	$75,000	%	6%
Other income	25,000	%	2%
	$100,000	%	8%
Other expense	12,500	%	1%
Income before income tax	$87,500	%	7%
Income tax expense	37,500	%	3%
Net income	$50,000	%	4%

b. The company is managing the cost of manufacturing product than the industry, and has slightly selling and administrative expenses relative to the industry. The combined impact causes net income as a percent of sales to be than the industry average.