Question

The following information is taken from the records of Erie Corp.(in thousands) for the year ended on December 31: 2019 2018 Sales $1,397 $1,122 Cost of Goods Sold 935 814 Selling Expenses 154 121 General Expenses 88 77 Other Revenue 4 7 Interest Expense 2 9 Income Taxes 134 66 After preparing a vertical analysis of this income statement data, what were the favorable and unfavoralbe changes?

Answer 1

Answer:

Favourable Changes:

Sales

Gross Profit

Operating Income

Interest Expense

Net Income

Unfavourable Changes:

Cost Of Sales  

Selling Expenses  

General Expenses

Other Revenue

Income Taxes

Explanation:

Observe Movement from 2018 results to 2019 results

                                        Erie Corp

                   Vertical Analysis of Income Statement

                                                                2019                    2018

Sales                                                        1,397                    1,122

Less Cost Of Sales                                   935                      814

Gross Profit                                               462                      308

Less Operating Expenses

Selling Expenses                                      154                       121

General Expenses                                     88                        77

Operating Income                                   220                       110

Less Non- Operating Expenses

Other Revenue                                            4                          7

Interest Expense                                         2                          9

Income Taxes                                           134                        66

Net Income                                                88                        42