Use the Information Below to Answer the Question That Follows

question 155

Essay

Use the information below to answer the question that follows.
All nine transactions for Ralston Sports Co. for September, the first month of operations, are recorded in the following T accounts:
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-Lewis Company has a condensed income statement as shown: ​
REQUIRED:
Prepare a horizontal analysis of Lewis Company's income statements. Comment on the trends, both favorable and unfavorable.

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Definitions:

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Manufacturing Overhead

Manufacturing overhead includes all the indirect costs associated with producing goods, other than direct materials and direct labor, such as utilities, depreciation, and maintenance expenses.

Direct Materials

Raw materials that are directly consumed in the manufacturing of a product and are easily identifiable in the finished product.

Period Cost

Expenses incurred that are not directly tied to production activities, such as selling, administration, and financial costs.