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For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $50,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement:
1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. Round your percentages to one decimal place. Enter all amounts as positive numbers.
2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in (1).

Respuesta :

Net income as a share of sales grew as a result by 2.5 percentage points. It looks that the sales promotion campaign has been intensified.

According to the vertical analysis, the cost of products sold and administrative costs dropped as a proportion of sales in comparison to selling expenses. Net income as a share of sales grew as a result by 2.5 percentage points. It looks that the sales promotion campaign has been intensified. Although the proportion of selling expenses to sales fell somewhat, the rise in sales more than made up for the lower cost.

A business will employ a temporary campaign or offer as part of a sales promotion to increase interest in or demand for its good or service. There are several reasons why a business would choose to use a sales promotion (or "promo"), but the primary one is to boost sales.

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