Revenue and expense data for the current calendar year for Sorenson El

QUESTION

Revenue and expense data for the current calendar year for Sorenson Electronics Company and for the electronics industry are as follows. The Sorenson Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages.(a) Prepare a common-sized income statement comparing the results of operations for Hrothgar Electronics Company with the industry average. Round to one decimal place(b) As far as the data permit, comment on significant relationships revealed by thecomparisons.
Answer to part A: Sorenson Electronics Electronics Industry Company Sales 2,050,000 2,101,250.0 (102.5 % of 20,50,000) Sales returns and allowances 50,000 52,531.3 (2.5 % of 2101,250) Net Sales 2,000,000 2,048,718.8 Cost of Goods Sold 1,100,000 1,249,718.4 (61% of 2048,718.80) Gross Profit 900,000 799,000.3 Selling expenses 560,000 471,205.3 Administrative expenses 220,000 204,871.9 (23% of 2048,718.80) Total Operating expenses 780,000 676,077.2 (10% of 2048,718.80) Operating Income 120,000 122,923.1 Other income 44,000 45,071.8 (2.2% of 2048,718.80) Total Income 164,000 167,994.9 Other Expense 20,000 20,487.2 (1% of 2048,718.80) Income before income tax 144,000 147,507.8 Income tax 60,000 102,435.9 (5% of 2048,718.80) Net Income 84,000 45,071.8 Answer to part B: Sorenson Sorenson Electronics Comments Electronics Electronics Industry Company Company % Sales 2,050,000 103% 102.50% more than the industry average Sales returns and allowances 50,000 3% 2.50% more than the industry average¦

Net Sales 2,000,000 100% 100.00% Cost of Goods Sold 1,100,000 55% 61% less than the industry average Gross Profit 900,000 45% 39% more than the industry average Selling expenses 560,000 28% 23% Administrative expenses 220,000 11% 10% Total Operating expenses 780,000 39% 33% Operating Income 120,000 6% 6% same as the industry average Other income 44,000 2% 2.20% less than the industry average Total Income 164,000 8% 8.20% less than the industry average Other Expense 20,000 1% 1% same as the industry average Income before income tax 144,000 7% 7.20% less than the industry average Income tax 60,000 3% 5% Net Income 84,000 4% 2.20% more than the industry average

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