Comparative income statements for two video game developers, Activision, Inc., and Electronic Arts, Inc., are provided for a recent fiscal year as follows:

The cost of goods sold represents the total cost of manufacturing and packaging a game, plus royalties and licenses paid to independent game developers. Product development costs are the costs incurred to design games.
1. Prepare common-sized income statements for both companies.
2. Interpret the significant differences in these common-sizedstatements.

Net revenues Cost of goods sold Gross profit Sales and marketing expenses General and administrative expenses Product development expense Other expenses Operating income $680,094 397,292 $282,802 $105,248 15,407 25,068 Electronic Arts $2,957,141 1,102,950 $1,854,191 370,468 184,825 510,858 12,443 $137,079 775,597