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2) The Income Statement for ABC Company for 2017 is as follows: Sales $3,500,000 Cost of...

2) The Income Statement for ABC Company for 2017 is as follows: Sales $3,500,000 Cost of Goods Sold 2,500,000 Gross Profit 1,000,000 Selling Expense 600,000 Administrative Expense 200,000 Total Operating Expense 800,000 Income from Operations 200,000 Income Tax Expense 50,000 Net Income 150,000 Instructions: Prepare a vertical analysis for the above income statement. (10 points)

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Answer #1
Sales 100%
Cost of Goods Sold 71.4%
Gross profit 28.6%
Selling expenses 17.1%
Administrative expenses 5.7%
Total operating expenses 22.9%
Income from operations 5.7%
Income tax expense 1.4%
Net income 4.3%

Example :-

Cost of Goods Sold = 2,500,000/3,000,000 = 71.4%

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