A comparative income statement is given below for Witzell Company:
WITZELL COMPANY
Comparative Income Statement

The CEO is worried about the decline in net income despite the fact that sales have increased over last year. She is also concerned about the increase in administrative expenses because managers had been told in the current year to reduce unnecessary spending.
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 two years?

This Year Last Year Sales. Cost of goods sold. Gross margin $2,000,000 1,200,000 800000 350,000 292,000 642,000 158,000 $2,500,000 920,000 450,000 340,000 Selling and administrative expenses: Selling expenses Administrative expenses.. Total selling and administrative expenses Operating income.... Interest expense... Net income before taxes . 790,000 130,000 $ 95,000 $ 138,000