HG Lang Designs operates an exclusive bridal boutique in Manhattan. All gowns are designed by Lang but are manufactured by various small firms in France and Italy. The following financial information for the company 

Assume you are the vice president of operations for HG Lang and you are preparing for a meeting to discuss the 2021 financial results with Adrienne Aiello, the company president. 

Required      

a. Prepare a vertical analysis of the income statements for 2020 and 2021. Based on this analysis, what is Adrienne Aiello likely to focus on in your upcoming meeting?      

b. During 2021, the company had price increases from its European gown manufacturers. Adrienne Aiello has asked you to estimate what the gross margin would have been for 2021 if the price increase had not occurred.

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HG Lang Designs Balance Sheets December 31, December 31, 2021 2020 Assets Current assets: $ 65,000 $ 88,000 333,200 Cash Accounts receivable 352,000 Inventory 1,795,000 1,764,000 Other current assets 62,000 65,000 Total current assets 2,274,000 2,250,200 Buildings, furniture, and fixtures, net 1,611,000 1,611,000 Total assets $3,885,000 $3,861,200 Liabilities and Stockholders' Equity Current liabilities: $ 73,000 $ 65,200 Accounts payable Bank loan payable Other accrued payables 89,000 110,000 13,000 11,000 Total current liabilities 175,000 186,200 Long-term debt 311,000 366,000 Total liabilities 486,000 552,200 Stockholders' equity: Common stock 1,248,000 1,248,000 Retained earnings 2,151,000 2,061,000 Total stockholders' equity 3,399,000 3,309,000 Total liabilities and stockholders' equity $3,885,000 $3,861,200