Obtain the income statements for Target Corporation for the fiscal years ending in 2008, 2009, 2010, 2011, and 2012. Target’s fiscal year ends near the end of January or the beginning of February. The 2010–2012 statements are included in Target’s 2012 annual report and Form 10-K, dated March 15, 2012. The 2008 and 2009 statements are in its 2009 annual report and Form 10-K, dated March 13, 2009.
To obtain the Form 10-Ks, you can use the EDGAR system (see Appendix A at the back of this text for instructions), or they can be found under the “Investors Relations” link on the company’s corporate website, The company’s annual reports are also available on its website. Note that this problem ignores Target’s revenues and expenses related to its credit card operations.

a. Compute the percentage change for each of the following categories of revenues and expenses for 2008 to 2009, 2009 to 2010, and 2010 to 2011:
Sales (not total revenues)
Cost of sales
Selling, general, and administrative expenses
Depreciation and amortization
Using an Excel spreadsheet will make this task much easier. After you have obtained these averages (you should have three averages for each of the six revenue and expense items), calculate an average of the changes for each item. The answer for the “Depreciation and amortization” item is shown as an example:
Percentage Change
2008–2009 ......... 10.1%
2009–2010 ......... 10.8
2010–2011 ......... 3.0
Average of the changes .... 8.0%
b. Prepare a budgeted income statement for 2012 (the fiscal year ending January 28, 2012), and compare the budgeted data to the actual results for 2012. To calculate budgeted amounts, multiply (1 + Average percentage change) in each revenue and expense item from Requirement b by the dollar amount of the corresponding revenue or expense item from 2011. This will represent the budgeted amount for that item for 2012. Don’t forget to use decimal data and not percentage data. Subtract the actual 2012 results from the budgeted results. Finally, divide the actual versus budgeted difference by the budgeted amount to determine a percentage variance from the budget.
The answer for the “Depreciation and amortization” item is shown as an example (dollar amounts are inmillions):

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