Question
Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. The Tannenhill Company data are
Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. The Tannenhill Company data are expressed in dollars. The electronics industry averages are expressed in percentages.
1 |
| Tannenhill Company | Electronics Industry Average |
2 | Sales | $4,000,000.00 | 100.0% |
3 | Cost of goods sold | 2,120,000.00 | 60.0 |
4 | Gross profit | $1,880,000.00 | 40.0% |
5 | Selling expenses | $1,080,000.00 | 24.0% |
6 | Administrative expenses | 640,000.00 | 14.0 |
7 | Total operating expenses | $1,720,000.00 | 38.0% |
8 | Income from operations | $160,000.00 | 2.0% |
9 | Other income | 120,000.00 | 3.0 |
10 |
| $280,000.00 | 5.0% |
11 | Other expense | 80,000.00 | 2.0 |
12 | Income before income tax | $200,000.00 | 3.0% |
13 | Income tax expense | 80,000.00 | 2.0 |
14 | Net income | $120,000.00 | 1.0% |
Required: | |
A. | Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average. Enter all amounts as positive numbers. |
B. | As far as the data permit, comment on significant relationships revealed by the comparisons. |
As far as the data permit, comment on significant relationships revealed by the comparisons.
The company is managing the cost of manufacturing product _____ than the industry, and has slightly _____ selling and administrative expenses relative to the industry. The combined impact causes net income as a percent of sales to be _______ than the industry average.
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