The Arlington Company Prepared a Common-Size Income Statement to Compare

question 73

Multiple Choice

The Arlington Company prepared a common-size income statement to compare its results with its key competitor, Bardo Company. Please refer to the following data:
$$\begin{array} { | l | r | r | } \hline & \text { Arlington Co. } & { \text { Bardo Co. } } \\\hline \text { Revenues } & 100.0 \% & 100.0 \% \\\hline \text { Cost of goods sold } & 42.1 \% & 47.8 \% \\\hline \text { Gross Profit } & 57.9 \% & 52.2 \% \\\hline \text { Operating expenses: } & & \\\hline \text { Sales and marketing expense } & 26.3 \% & 8.6 \% \\\hline \text { General and administrative expense } & 12.0 \% & 10.8 \% \\\hline \text { Research and development expense } & 4.1 \% & 10.2 \% \\\hline \text { Total operating expenses } & 42.4 \% & 29.6 \% \\\hline & & \\\hline \text { Income before income tax } & 15.5 \% & 22.6 \% \\\hline \text { Income tax expense } & 3.3 \% & 5.8 \% \\\hline \text { Net income(loss) } & 12.3 \% & 16.8 \% \\\hline\end{array}$$
-
Which of the following statements can be correctly concluded from the above data?

• A) Arlington's cost of goods sold is lower than Bardo's on a per unit basis.
• B) Arlington produces a higher amount of gross profit than Bardo.
• C) Arlington makes less total net income than Bardo.
• D) Bardo has more effective cost control than Arlington in the area of operating expenses.

---

Definitions:

Religious Involvement

The extent of an individual's participation in activities and rituals of a religious community, reflecting beliefs, practices, and a sense of belonging to a faith group.

Longevity

The length of time that an individual lives, often relating to life spans extended beyond the typical due to various factors like genetics and lifestyle.

Arthritis

A broad description for disorders characterized by joint pain and swelling.

Homeopathy

A system of alternative medicine based on the principle that ‘like cures like’, using highly diluted substances that cause symptoms similar to the illness being treated.