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5 January, 10:47

Given the following income statement information, what percentage would appear for selling expenses in a vertical analysis?

Sales $600,000

Cost of goods sold 400,000

Selling expenses 50,000

Net income 36,000

a. 67%

b. 6%

c. 8%

d. Cannot be determined with information provided.

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Answers (1)
  1. 5 January, 13:54
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    Answer: C.) 8%

    Explanation:

    Given the following:

    Sales $600,000

    Cost of goods sold 400,000

    Selling expenses 50,000

    Net income 36,000

    what percentage would appear for selling expenses in a vertical analysis?

    Each income statement item is expressed as a percentage proportion of total sales.

    (Income statement item : Total sales) * 100

    (selling expenses : total sales) * 100

    (50,000 : 600,000) * 100

    0.08333 * 100 = 8.33%

    = 8%
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