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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Definitions:

Economic Question

A query that seeks to understand how scarce resources are allocated, such as what to produce, how to produce it, and for whom to produce.

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Mechanical devices designed to extract milk from animals, significantly improving efficiency and hygiene in dairy farming.

Shift AA to BA

Moving from one economic point or position (AA) to another (BA), indicating a change in an economic condition or policy impact.

Technological Improvement

The innovation or development of new techniques, methods, or devices that increase productivity and efficiency in processes or products.