The following income statements were drawn from the annual reports of Pierro Sales Company.

The president's message in the company's annual report stated that the company had implemented a strategy to increase market share by spending more on advertising. The president indicated that prices held steady and sales grew as expected. Write a memo indicating whether you agree with the president's statements. How has the strategy affected profitability? Support your answer by measuring growth in sales and selling expenses. Also prepare common size income statements and make appropriate references to the differences between 2010 and2011.

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2010 S426,500 114,500 2011 Net Sales Cost of Goods Sold Gross Margin Less: Operating Expense $520,600 312000 1369,600 151,000 Selling and Administrative Expenses 000 64800 64006.200 Net income All dollar amounts are reported in thousands