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 2012 and2013.

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2012 2013 $520,600 Net sales Cost of goods sold Gross margin Less: Operating expense $580,500 1369,600 (401,500 179,000 151,000 (64.800)(81,300) 86 200 97,700 Selling and administrative expenses Net income All dollar amounts are reported in thousands.