McAllen Company reported the following operating results for 2012 and 2011.

Required
a. Perform a horizontal analysis, showing the percentage change in each income statement component between 2012 and 2011.
b. Perform a vertical analysis, showing each income statement component as a percent of sales for eachyear.

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2011 2012 Sales $480,000 $420,000 Cost of goods sold Selling expenses Administrative expenses Interest expense 246,000 28,000 52,000 8,000 225,000 24,000 49,000 10,000 Total expenses Income before taxes Income taxes expense 334,000 308,000 112,000 21,000 $ 91,000 146,000 25,000 $121,000 Net income