Common-Sized Income Statement Revenue and expense data for the current calendar year for Lyons Electronics Company and for the electronics industry are as follows. Lyons Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages. Lyons Electronics Company Electronics Industry Average Sales $ 7,500,000 100 % Cost of goods sold (4,125,000) (61.0) Gross profit $3,375,000 39.0 % Selling expenses $(2,250,000) (23.0) % Administrative expenses (525,000) (10.0) Total operating expenses $(2,775,000) (33.0) % Operating income $600,000 6.0 % Other revenue and expense: Other revenue 30,000 3.0 Other expense $(7,500) (1.0) Income before income tax $ 622,500 8.0 % Income tax (187,500) (2.5) Net income $435,000 5.5 % a. Prepare a common-sized income statement comparing the results of operations for Lyons Electronics Company with the industry average. If required, round percentages to one decimal place.

Explanation:

In common sized income statement , each line item is expressed as a percentage of sales turnover and compared to the percentage industry standard for analysis purpose.

                                   Lyon              %              Industry %

Revenue                   7,500,000        100            100

Cost of goods          (4,125,000)        55              61

Gross profit               3,375,000         45             39

Selling expenses     (2,250,000)        30             23

Admin Expenses        (525,000)         7               10

Total Operating Exp   (2,775,000)      37             33

Operating income        600,000         8                6

Other revenue                30,000        0.4              3

Other expenses               (7500)        0.1                1

Income before tax          622,500      8.3              8

Income Tax                      187,500        2.5             2.5

Net Income                     435,000       5.8             5.5

answer; i believe the correct answer is (a) purchase of treasury stock;

so they can see what that city is producing and to also see if they can some how get that product. like gold in africa.