734 of 778 Performing horizontal analysisincome statement Data for McCormick Des

Question

734 of 778 Performing horizontal analysisincome statement Data for McCormick Designs, Inc. follow: ed-15 MCCORMICK DESIGNS, INC Comparative Income Statement Years Ended December 31, 2016 and 2015 2016 $ 431,250S373,000 2015 Net Sales Revenue Expenses 202,000189,00 Cost of Goods Sold Selling and Administrative Expenses Other Expenses Total Expenses 92,550 2.150 283,700 S121,200 S 89,300 100,050 310,050 Net Income Requirements 1. Prepare a horizontal analysis of the comparative income statement of McCormick Designs, Inc. Round percentage changes to one decimal place. 2. Why did 2016 net income increase by a higher percentage than net sales revenue 5:55

Explanation / Answer

MCCORMICK DESIGNS, INC. Income Statement Year ended December 31 , 2016 and 2015 2016 2015 Increase (Decrease) Amount % Nst Sales Revenue 431250 373000 58250 15.6 Expenses Cost of goods sold 202000 189000 13000 6.9 Selling and Administrative Expenses 100050 92550 7500 8.1 Other Expenses 8000 2150 5850 272.1 Total Expenses 310050 283700 26350 9.3 Net Income 121200 89300 31900 35.7 100/373000*(431250-373000) 2016 % Total Net sales Revenue (A) 431250 15.6 Total Expenses (B) 310050 9.3 Total Income (A-B) 121200 35.7 b Net Income increased by a higher % than sales revenue because total expenses is increasing at a lower rate than Revenue

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