A vertical analysis of two income statements for Danielle's Design Services is shown below: *Differences due to rounding

Which of the following analyses reflect the data given?
A) Wages expense and rent expense show a favorable trend, while supplies and miscellaneous expenses show an unfavorable trend.
B) Wages expense and rent expense show an unfavorable trend, while supplies and miscellaneous expenses show a favorable trend.
C) Wages expense and supplies expense show a favorable trend, while rent and miscellaneous expenses show an unfavorable trend.
D) Wages expense and miscellaneous expense show an unfavorable trend, and rent and supplies expenses show an unfavorable trend.

Question

A vertical analysis of two income statements for Danielle's Design Services is shown below: ​  *Differences due to rounding
​
Which of the following analyses reflect the data given?
A) Wages expense and rent expense show a favorable trend, while supplies and miscellaneous expenses show an unfavorable trend. 
B) Wages expense and rent expense show an unfavorable trend, while supplies and miscellaneous expenses show a favorable trend. 
C) Wages expense and supplies expense show a favorable trend, while rent and miscellaneous expenses show an unfavorable trend. 
D) Wages expense and miscellaneous expense show an unfavorable trend, and rent and supplies expenses show an unfavorable trend.

Quizplus · Accepted Answer

The vertical analysis shows that wages expense and rent expense have increased as a percentage of total revenue over the two years, indicating an unfavorable trend. Conversely, supplies expense and miscellaneous expense have decreased as a percentage of total revenue, indicating a favorable trend. Therefore, choice B correctly reflects the data given.

A Vertical Analysis of Two Income Statements for Danielle's Design