Common-Sized Income Statement

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

	Tannenhill Company			Electronics Industry Average
Sales	$1,250,000			100	%
Cost of merchandise sold	837,500			72
Gross profit	$412,500			28	%
Selling expenses	$237,500			15	%
Administrative expenses	100,000			7
Total operating expenses	$337,500			22	%
Income from operations	$75,000			6	%
Other revenue and expense:
Other revenue	25,000			2
Other expense	(12,500)			1
Income before income tax expense	$87,500			7	%
Income tax expense	37,500			5
Net income	$50,000			2	%

a. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

Tannenhill Company
Common-Sized Income Statement
For the Year Ended December 31
	Tannenhill Company Amount	Tannenhill Company Percent	Electronics Industry Average
Sales	$1,250,000	fill in the blank 3ebe7df42033ffe_1%	100.0%
Cost of merchandise sold	837,500	fill in the blank 3ebe7df42033ffe_2%	72%
Gross profit	$412,500	fill in the blank 3ebe7df42033ffe_3%	28%
Selling expenses	$237,500	fill in the blank 3ebe7df42033ffe_4%	15%
Administrative expenses	100,000	fill in the blank 3ebe7df42033ffe_5%	7%
Total operating expenses	$337,500	fill in the blank 3ebe7df42033ffe_6%	22%
Income from operations	$75,000	fill in the blank 3ebe7df42033ffe_7%	6%
Other revenue and expense:
Other revenue	25,000	fill in the blank 3ebe7df42033ffe_8%	2%
Other expense	(12,500)	fill in the blank 3ebe7df42033ffe_9%	1%
Income before income tax	$87,500	fill in the blank 3ebe7df42033ffe_10%	7%
Income tax expense	37,500	fill in the blank 3ebe7df42033ffe_11%	5%
Net income	$50,000	fill in the blank 3ebe7df42033ffe_12%	2%

b. The company is managing the cost of manufacturing product than the industry, and has slightly selling and administrative expenses relative to the industry. The combined impact causes net income as a percent of sales to be than the industry average.