For 2008, Audio Tone Company initiated a sales promotion campaign that included the expenditure of an additional $13,800 for advertising. At the end of the year, Gordon Kincaid, the president, is presented with the following condensed comparative income statement:

Instructions

1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to net sales for each of the years. Round to two decimal places.

2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in (1).