Income statements for Burch Company for Year 3 and Year 4 follow.

Required

Round all percentages to one decimal point.

a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4.

b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.

Transcribed Image Text:

Year 4 Year 3 Sales $240,000 $200,000 Cost of goods sold Selling expenses Administrative expenses Interest expense Total expenses 180,000 26,000 12,000 124,000 20,000 18,000 8,000 7,500 225,500 170,000 Income before taxes 14,500 1,200 30,000 3,000 $ 27,000 Income taxes expense Net income $ 13,300