Use the following information for questions below.
Consider the following income statement data for Barolo Inc.:
$$\begin{array}{l}
\begin{array} { l l r }
&2020&2019\
\text {Sales revenue }&\$ 97,300&\$86,200\
\text {Less: Cost of goods sold }&45,600&53,400\
\text {Gross profit }&51,700&32,800\
\text {Less: Selling and administration costs }&22,500&18,300\
\text {Net Income }&\$29,200&\$14,500\
\end{array}
\end{array}$$
-The common-size percentage for selling and administration costs in 2020 was
A)21.2%.
B)23.1%.
C)43.5%.
D)77.0%.

Question

Use the following information for questions below.
Consider the following income statement data for Barolo Inc.:
$$\begin{array}{l}
\begin{array} { l l r } 
&2020&2019\
\text {Sales revenue }&\$ 97,300&\$86,200\
\text {Less: Cost of goods sold }&45,600&53,400\
\text {Gross profit }&51,700&32,800\
\text {Less: Selling and administration costs }&22,500&18,300\
\text {Net Income }&\$29,200&\$14,500\
\end{array}
\end{array}$$
-The common-size percentage for selling and administration costs in 2020 was
A)21.2%.
B)23.1%.
C)43.5%.
D)77.0%.

Quizplus · Accepted Answer

To calculate the common-size percentage for selling and administration costs, we divide these costs by the total revenue for the corresponding year (2020 in this case). 
Selling and administration costs = $3,200,000 
Total revenue in 2020 = $13,870,000 
Common-size percentage for selling and administration costs = ($3,200,000/$13,870,000) x 100 = 23.1% 
Therefore, the answer is B.

Use the Following Information for Questions Below -The Common-Size Percentage for Selling and Administration Costs in 2020