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Common-Sized Income Statement

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

	Tannenhill Company			Electronics Industry Average
Sales	$1,120,000			100	%
Cost of goods sold	638,400			62
Gross profit	$481,600			38	%
Selling expenses	$302,400			22	%
Administrative expenses	112,000			10
Total operating expenses	$414,400			32	%
Operating income	$67,200			6	%
Other income	22,400			2
	$89,600			8	%
Other expense	11,200			1
Income before income tax	$78,400			7	%
Income tax expense	33,600			5
Net income	$44,800			2	%

a. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

Tannenhill Company
Common-Sized Income Statement
For the Year Ended December 31
	Tannenhill Company Amount	Tannenhill Company Percent	Electronics Industry Average
Sales	$1,120,000		100.0%
Cost of goods sold	638,400		62%
Gross profit	$481,600		38%
Selling expenses	$302,400		22%
Administrative expenses	112,000		10%
Total operating expenses	$414,400		32%
Operating income	$67,200		6%
Other income	22,400		2%
	$89,600		8%
Other expense	11,200		1%
Income before income tax	$78,400		7%
Income tax expense	33,600		5%
Net income	$44,800		2%

b. 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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