Below Is a Comparative Income Statement for Samson Company: Sams

question 148

Multiple Choice

Below is a comparative income statement for Samson Company: Sams on Comp any Income Statement
For the Years Ended
December 31, 20X6 and 20X5
$\begin{array}{lll}&20X6&20X5\\\text { Sales } & \$ 1,744 & \$ 1,562 \\\text { Less: Cost of goods sold } & \underline{992} & \underline{806} \\\text { Gross profit } & \$ 752 & \$ 756 \\\text { Less op erating expenses: } & &\\\text { Wage expense } & \$ 172 & \$ 160 \\\text { Depreciation expense } & 28 & 26 \\\text { Rent expens } & 36 & 36 \\\text { Miscellaneous expense } & \underline{40} & \underline{70} \\\text { Total operating expenses } & \$ 276 & \$ 292\\\text { Operating income }&\$476&\$464\\\text { Less other expenses: }\\\text { Interest } & \underline{20} & \underline{60} \\\text { Income before tax } & \$ 456 & \$ 404 \\\text { Less: Income tax expense } & \underline{182} & \underline{162} \\\text { Net income } & \$ 274 & \$ 242\end{array}$ Identify the issue that would be of most concern or source of optimism, on behalf of financial analysts of Samson Company.

• A) Income taxes increased 12.3%.
• B) There was a 23.1% increase in cost of goods sold with only an 11.7% increase in sales.
• C) Wages expense was approximately 10% of sales.
• D) There was a 12.9% increase in income before taxes.

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