(Solved by Humans)-Problem 3-26 Using common size income statements to make comparisons The following income...

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Problem 3-26      Using common size income statements to make comparisons The following income statements were drawn from the annual reports of Pierro Sales  Company.     Net sales 2012* $520,600 2013* $580,500 Cost of goods sold  (369,600)  (401,500) Gross margin Less: Operating expense Selling and administrative expenses 151,000      (64,800) 179,000      (81,300) Net income $ 86,200 $ 97,700                 The president’s message in the company’s annual report stated that the company had imple- mented a strategy to increase market share by spending more on advertising. The president indicated that prices held steady and sales grew as expected. Write a memo indicating whether you agree with the president’s statements. How has the strategy affected profitability? Support your answer by measuring growth in sales and selling expenses. Also prepare common size income statements and make appropriate references to the differences between 2012 and 2013.