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Osgood Company Provided the Following Income Statement for Year 1

Question 42

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Osgood Company provided the following income statement for Year 1 and Year 2:
 Year 2 Year 1 Sales $220,000$160,000 Cost of goods sold 156,000105,000 Gross margin 64,00055,000 Less operating expenses:  Selling and administrative expenses 26,00015,000 Interest expense 2,0003,000 Income before tax 36,00037,000 Income tax expense 10,80011,100Net income $25,200$25,900\begin{array}{lrr}&\text { Year } 2 & \text { Year } 1\\\text { Sales } & \$ 220,000 & \$ 160,000 \\\text { Cost of goods sold } & 156,000 & 105,000 \\\text { Gross margin } & 64,000 & 55,000 \\\text { Less operating expenses: } & &\\\\\text { Selling and administrative expenses } & 26,000 & 15,000 \\\text { Interest expense } & 2,000 & 3,000 \\\text { Income before tax } & 36,000 & 37,000 \\\text { Income tax expense } & 10,800 & 11,100 \\\text {Net income } & \$ 25,200 & \$ 25,900\end{array} Required: Perform vertical analysis on Osgood's income statements for Year 1 and Year 2. Round your answer to one decimal place (i.e., 22.4%).Comment on the results, comparing Year 1 to Year 2.

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