Question

McClane Designs, Inc. Comparative Income Statement Years Ended December 31, 2018 and 2017 2018 2017 $ 432,000 $ 373,750 Net Sales Revenue Expenses: Cost of Goods Sold Selling and Administrative Expenses Other Expenses 203,000 96,550 6,750 306,300 125,700 $ 187,000 91,050 3,250 281,300 92,450 Total Expenses Net Income Print Done Clear All

Answer 1

Part 1

McClane Designs, Inc. Common-Size Income Statement Years Ended December 31, 2018 and 2017
	2018	2017
Net Sales Revenue	100.0%	100.0%
Expenses:
Cost of Goods Sold	47.0%	50.0%
Selling and Administrative Expenses	22.3%	24.4%
Other Expenses	1.6%	0.9%
Total Expenses	70.9%	75.3%
Net income	29.1%	24.7%

Net sale revenue

2018 = 432000/432000= 100.0%

2017 = 373750/373750 = 100.0%

Cost of Goods Sold

2018 = 203000/432000= 47.0%

2017 = 187000/373750 = 50.0%

Selling and Administrative Expenses

2018 = 96550/432000= 22.3%

2017 = 91050/373750 = 24.4%

Other Expenses

2018 = 6750/432000= 1.6%

2017 = 3250/373750 = 0.9%

Net income

2018 = 125700/432000= 29.1%

2017 = 92450/373750 = 24.7%

Part 2

An investor would be pleased with 2018 in comparison with 2017. Cost of goods sold and selling and general expenses - the two largest expenses - consumed smaller percentages of net revenue in 2018 and net income represents a higher percentage of revenues. Overall, profits are rising.