Revenue and expense data for Bluestem Company are as follows:

	Year 2		Year 1
Administrative expenses	$37,000		$20,000
Cost of goods sold	350,000		320,000
Income tax	40,000		32,000
Sales	800,000		700,000
Selling expenses	150,000		110,000

a. Prepare a comparative income statement, with vertical analysis, stating each item for both years as a percent of sales. Round percents to one decimal point.

Bluestem Company
Comparative Income Statement
For Years Ended December 31, Year 2 and Year 1
	Year 2 Amount	Year 2 Percent	Year 1 Amount	Year 1 Percent
	$	%	$	%
		%		%
	$	%	$	%
		%		%
		%		%
Total operating expenses	$	%	$	%
	$	%	$	%
		%		%
	$	%	$	%

b. Complete the following regarding significant changes disclosed by the comparative income statement.

The most significant increase in expenses is , which offsets the decrease in , resulting in the overall of net income.