For 20Y2, Fielder Industries Inc. initiated a sales promotion campaign that included the expenditure of an additional $40,000 for advertising. At the end of the year, Leif Grando, the president, is presented with the following condensed comparative income statement:

Fielder Industries Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$1,300,000		$1,180,000
Cost of goods sold	(682,500)		(613,600)
Gross profit	$617,500		$566,400
Selling expenses	$(260,000)		$(188,800)
Administrative expenses	(169,000)		(177,000)
Total operating expenses	$(429,000)		$(365,800)
Operating income	$188,500		$200,600
Other revenue	78,000		70,800
Income before income tax expense	$266,500		$271,400
Income tax expense	(117,000)		(106,200)
Net income	$149,500		$165,200

Required:

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1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. Round to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Fielder Industries Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1

	20Y2 Amount	20Y2 Percent	20Y1 Amount	20Y1 Percent
Sales	$1,300,000	fill in the blank 4ed727f8a07e078_1%	$1,180,000	fill in the blank 4ed727f8a07e078_2%
Cost of goods sold	(682,500)	fill in the blank 4ed727f8a07e078_3%	(613,600)	fill in the blank 4ed727f8a07e078_4%
Gross profit	$617,500	fill in the blank 4ed727f8a07e078_5%	$566,400	fill in the blank 4ed727f8a07e078_6%
Selling expenses	$(260,000)	fill in the blank 4ed727f8a07e078_7%	(188,800)	fill in the blank 4ed727f8a07e078_8%
Administrative expenses	(169,000)	fill in the blank 4ed727f8a07e078_9%	(177,000)	fill in the blank 4ed727f8a07e078_10%
Total operating expenses	$(429,000)	fill in the blank 4ed727f8a07e078_11%	$(365,800)	fill in the blank 4ed727f8a07e078_12%
Operating income	$188,500	fill in the blank 4ed727f8a07e078_13%	$200,600	fill in the blank 4ed727f8a07e078_14%
Other revenue	78,000	fill in the blank 4ed727f8a07e078_15%	70,800	fill in the blank 4ed727f8a07e078_16%
Income before income tax expense	$266,500	fill in the blank 4ed727f8a07e078_17%	$271,400	fill in the blank 4ed727f8a07e078_18%
Income tax expense	(117,000)	fill in the blank 4ed727f8a07e078_19%	(106,200)	fill in the blank 4ed727f8a07e078_20%
Net income	$149,500	fill in the blank 4ed727f8a07e078_21%	$165,200	fill in the blank 4ed727f8a07e078_22%

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2. The net income as a percent of sales has

increaseddecreased

. All the costs and expenses, other than selling expenses, have maintained their approximate cost as a percent of sales relationship between 20Y1 and 20Y2. Selling expenses as a percent of sales, however, have

increaseddecreased

. Apparently, the new advertising campaign

hashas not

been successful. The increased expense

hashas not

produced sufficient sales to maintain relative profitability. Thus, selling expenses as a percent of sales have

increaseddecreased

.