A comparative income statement is given below for Ryder Company:

The president is concerned that net income is down even though sales have increased during the year. The president is also concerned that administrative expenses have increased because the company made a concerted effort to cut €œfat€ out of the organization.
Required:
1. Express each year€™s income statement in common-size percentages. Carry computations to one decimal place.
2. Comment briefly on the changes between the twoyears.

Ryder Company Comparative Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses: This Year Last Year $5,000,000 $4,000,000 3,160,000 2,400,000 1,840,000 1,600,000 900,000 700,00 584,000 1,580,000 1.284.000 316,000 40,000 S 190.000 276,000 Selling expenses Administrative expenses Total selling and administrative expenses Net operating income Interest expense Net income before taxes 680,000 260,000 70,000