Kellogg Company (K) produces, markets, and distributes cereal and food products including Cheez-It, Coco Pops, Rice Krispies, and Pringles. The following partial income statements (in millions) were adapted from recent financial statements.

..........................................................Year 1 ............... Year 2

Sales ................................................... $14,792 .............. $14,580

Cost of goods sold................................ (8,689) ............. (9,517)

Gross profit ............................................ $ 6,103 ......... $ 5,063

Selling and administrative expenses ...... (3,266) ......... (4,039)

Operating income ................................... $ 2,837 ......... $ 1,024

1. Prepare common-sized income statements for Years 1 and 2. Round to one decimal place.
2. Using your answer to (1), analyze the performance of Kellogg in Year 2.

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Year 1 Year 2 Gross profit Selling and administrative expenses.... Operating income . $14,580 9,517) 5,063 (4,039) $ 1,024 . $ 6,1013 (3,266) $ 2,837