Comparative income statements for Callister Company for 2012 and 2011 are given below.

1. Prepare common-size income statements for Callister Company for 2012 and 2011.
2. The profit margin for Callister is lower in 2012 than in 2011. What expense or expenses are causing this lowerprofitability?

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2012 2011 $1,600,000 $900,000 480,000 Sales. Cost of goods sold. 1,020,000 $ 580,000 200,000 $ 380,000 80,000 Gross profit. Selling and administrative expenses Operating income. Interest expense. $420,000 160,000 $260,000 60,000 $ 300,000 90,000 $ 210,000 Income before taxes. $200,000 60,000 Income tax expense $140,000 Net income