Comparative income statements for Long Pond Company for 2008 and 2007 follow.

1. Prepare common-size income statements for Long Pond Company for 2008 and 2007.
2. Return on sales for Long Pond is lower in 2008 than in 2007. What expense or expenses are causing this lowerprofitability?

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2008 2007 Sales Cost of goods sold Gross profit Selling and general expenses Operating income Interest expense Income before income taxes Income taxes $00.000 $450,000 240,000 $290,000 $210,000 60,000 $210,000 $150,000 30,000 $170,000 $120,000 36,000 . 510,000 80,000 40,000 51.000 Net income.. 119,000 S 84.000