Long Pond Company has these common-size income statements for Year 1 and Year 2:

Year 1 Year 2

Sales 100% 100%

Cost of Goods Sold 45% 45%

Wage Expense 30% 21%

Rent Expense 4% 20%

Advertising Expense 10% 10%

Net Income 11% 4%

Which ONE of the following statements is true?

• In Year 2, Advertising Expense is a problem.
• In Year 2, Wage Expense is a problem.
• In Year 2, Rent Expense is a problem.
• In Year 2, Cost of Goods Sold is a problem.