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Problem 1. Common-size percentages are often used to compare the statements of companies of unequal size. The condensed income statements of Companies A and B
Problem | ||||||||||||||
1. | Common-size percentages are often used to compare the statements of companies of unequal size. The condensed income statements of Companies A and B are given below. Enter in the spaces provided the amounts expressed in common-size percentages. | |||||||||||||
Company A and Company B | ||||||||||||||
Income Statements for Year Ended December 31, 2007 | ||||||||||||||
Dollar Amounts | Common-Size Percentages | |||||||||||||
Company A | Company B | Company A | Company B | |||||||||||
Sales | $450,000 | $525,000 | ||||||||||||
Cost of goods sold | 261,000 | 210,000 | ||||||||||||
Gross margin | $189,000 | $315,000 | ||||||||||||
Selling expenses | $81,000 | $89,250 | ||||||||||||
Administrative expenses | 45,000 | 52,500 | ||||||||||||
Total operating expenses | $126,000 | $141,750 | ||||||||||||
Income | $63,000 | $173,250 | ||||||||||||
2. | After expressing the amounts of the income statements in common-size percentages, examine them and name the company that operated more efficiently. | |||||||||||||
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