Comparative income statements for Xenon Corporation for 2013 and 2012 follow.

1. Prepare common-size income statements for Xenon Corporation for 2013 and 2012.
2. Return on sales for Xenon is lower in 2013 than in 2012. What expense or expenses are causing this lower profitability?

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2013 2012 $950,000 $600,000 Sales Cost of goods sold Gross profit . Selling and general expenses Operating income Interest expense.. Income before income taxes .__ Income taxes. 595,000 325,000 .. . ._.... . 115,000 94,000 45,00035,000 72,000 57,000 Net income . .. . $123,000 89,000