PINE TREE COMPANY
COMPARATIVE INCOME STATEMENTS
FOR THE YEARS ENDED 12/31/17 AND 12/31/16
	(in $ thousands)
	2017	2016
Sales	1,969	1,718
Less: Cost of Goods Sold	1,091	886
Gross profit	878	832
Less: operating expenses
Wage expense	195	176
Depreciation expense	36	29
Rent expense	46	40
Miscellaneous expense	49	77
Total operating expenses	326	322
Operating income	552	510
Less: interest expense	19	66
Income before tax	533	444
Less: income tax expense	213	178
Net income	320	266
b. What might best explain the change in gross profit % from 2016 to 2017? (5 points)
1. Increased production costs
2. Decrease in volume (quantity) of goods sold
3. Increase in selling prices
4. Decreased raw materials costs
c. Which is the best explanation for the change in Net Income $ from 2016 to 2017? (5 points)
1. Increase in sales
2. Decrease in production costs
3. Decrease in miscellaneous expense
4. Increase in income tax expense