Revenue and expense data for the current calendar year for Dawg Electronics Company and for the electronics industry are as follows. Dawg Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages.

	Dawg Electronics Company		Electronics Industry Average
Sales	$2,510,000			100	%
Cost of goods sold	(1,355,400)			(60)
Gross profit	$1,154,600			40	%
Selling expenses	$(702,800)			(17)	%
Administrative expenses	(276,100)			(17)
Total operating expenses	$(978,900)			(34)	%
Operating income	$175,700			6	%
Other revenue and expense:
Other revenue	50,200			4
Other expense	(25,100)			(3)
Income before income tax	$200,800			7	%
Income tax expense	(75,300)			(5)
Net income	$125,500			2	%

a. Prepare a common-sized income statement comparing the results of operations for Dawg Electronics Company with the industry average. If required, round percentages to one decimal place.

	Dawg Electronics Company Amount	Dawg Electronics Company Percent	Electronics Industry Average
Sales	$2,510,000	fill in the blank 314f16f7ff9f01a_1%	100%
Cost of goods sold	(1,355,400)	fill in the blank 314f16f7ff9f01a_2%	(60)%
Gross profit	$1,154,600	fill in the blank 314f16f7ff9f01a_3%	40%
Selling expenses	$(702,800)	fill in the blank 314f16f7ff9f01a_4%	(17)%
Administrative expenses	(276,100)	fill in the blank 314f16f7ff9f01a_5%	(17)%
Total operating expenses	$(978,900)	fill in the blank 314f16f7ff9f01a_6%	(34)%
Operating income	$175,700	fill in the blank 314f16f7ff9f01a_7%	6%
Other revenue and expense:	blank	blank	blank
Other revenue	50,200	fill in the blank 314f16f7ff9f01a_8%	4%
Other expense	(25,100)	fill in the blank 314f16f7ff9f01a_9%	(3)%
Income before income tax	$200,800	fill in the blank 314f16f7ff9f01a_10%	7%
Income tax expense	(75,300)	fill in the blank 314f16f7ff9f01a_11%	(5)%
Net income	$125,500	fill in the blank 314f16f7ff9f01a_12%	2%

Question Content Area

b. Which of the following statements is true about Dawg Electronics Company?

Dawg's cost of goods sold is higher than the industry average.

The cause of the higher selling expenses as a percent of sales, relative to the industry, should be investigated further.

The cause of higher cost of goods sold as a percent of sales, relative to the industry, should be investigated.

Dawg's administrative expenses percentage are higher than the industry average.