The following income statement and vertical analysis data are available for Sussman Audio Products:

Required:
1. Suggest why net income increased from $92,500 to $414,900 while the cost of goods sold percentage increased each year and selling and administrative expenses have decreased.
2. Explain what could cause sales to increase while the gross margin percentage decreases.

Transcribed Image Text:

Sussman Audio Products Consolidated Income Statements in thousands Year Ended June 30, 2010 Amount % Amount % Amount % $4,122.0 100.0 $3,566.0 100.0 $2,965.0 100.0 2011 2009 Sales Other income, net Total revenues Costs and expenses: 39.7 1.0 36.7 1.0 21.3 0.7 $4,161.7 101.0 $3,602.7 101.0 $2,986.3 100.7 $1,893.6 45.9 $1,610.3 45.2 1,310.8 44.2 Cost of goods sold Selling and administrative 1,610.3 9. 1,603.6 5.0 ,505.3 50.8 Interest 6141.5 69.7 2.0 63.2 2.1 Total costs and expenses 3565.3 86.5 $3,283.6 92.2 $2,8793 97.1 Income before income taxes 5964 14.5 181.5 4.4 4149 10.1 319. 9 107.0 3 14.5 0.5 Income taxes expense Net income 109.6 209.5 5.9 92.5 3.1 3.1