-Based on Common Size Analysis, Which of the Following Statements

question 69

Multiple Choice

$\begin{array}{l}\text { Consider the following statement of earnings data for Mandrake Mills Inc. }\\\begin{array} { | l | r | r | } \hline & \mathbf { 2 0X7 } & \mathbf { 2 0 X 6 } \\\hline \text { Sales revenue } & \$ 97,300 & \$ 86,200 \\\hline \text { Less: Cost of goods sold } & \underline { 45,600 } & \underline { 53,400 } \\\hline \text { Gross profit } & 51,700 & 32,800 \\\hline \text { Selling and administration expense } & \underline { 22,500 } & \underline { 18,300 } \\\hline \text { Income before income tax } & \$ 29,200 & \$ 14,500 \\\hline\end{array}\end{array}$
-Based on common size analysis, which of the following statements is correct

• A) the increase in sales revenue in 20X7 was caused by higher selling and administrative expenses.
• B) the increase in gross pro?t in 20X7 was due to increased sales.
• C) income before income tax as a percent of sales declined in 20X1.
• D) the company's cost to sales ratio improved in 20X7.

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