Outdoor World, Inc., manufactures camping equipment. Shown for the current year are the income statement for the company and a common size summary for the industry in which the company operates. Outdoor World, Industry Inc. Average Sales (net) Cost of goods sold Gross profit on sales Operating expenses: Selling $ 20,000,000 9,800,000 100% 58 $ 10,200,000 42% $ 4,200,000 16% General and administrative 3,400,000 20 Total operating expenses $ 7,600,000 36% Operating income Income tax expense Net income Return on assets $ 2,600,000 1,200,000 $ 1,400,000 6% 3 3% 23% 14% Required: a. Prepare a common size income statement. The first column should show for Outdoor World, Inc., all items expressed as a percentage of net sales. The second column has been completed and shows the equivalent industry average for the data given in the problem. The purpose of this common size statement is to compare the operating results of Outdoor World, Inc., with the average for the industry. Sales (net) Cost of goods sold Outdoor World, Inc. Industry Average 100 % 100 % 58 96 42 % Gross profit on sales Operating expenses: Selling 96 16 % General and administrative 20 Total operating expenses 96 38 % Operating income 96 6% Income tax expense 3 Net income 96 3 % b. If results of Outdoor World is better or worse than industry average. The results of Outdoor World