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.

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%