Common-sized income statement

Revenue and expense data for the current calendar year for Bull Run Company and for the electronics industry are as follows. The Bull Run Company data are expressed in dollars. The electronics industry averages are expressed in percentages.

Bull Run Company Electronics Industry Average

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Sales $2,100,000 105.0%

Sales returns and allowances 100,000 5.0

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Net sales $2,000,000 100.0%

Cost of goods sold 1,040,000 60.0

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Gross profit $960,000 40.0%

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Selling expenses $560,000 22.0%

Administrative expenses 300,000 12.0

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Total operating expenses $860,000 34.0%

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Operating income $100,000 6.0%

Other income 60,000 3.0%

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$160,000 9.0%

Other expense 40,000 2.0

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Income before income tax $120,000 7.0%

Income tax expense 60,000 6.0

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Net Income $60,000 1.0%

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a. Prepare a common-sized income statement comparing the results of operations for Bull Run Company with the industry average. Round to one decimal place.

b. As far as the data permit, comment on significant relationships revealed by the comparisons.