The Arlington Company Prepared a Common-Size Income Statement to Compare

Multiple Choice

The Arlington Company prepared a common-size income statement to compare its results with its key competitor,Bardo Company.Please refer to the following data: $\begin{array}{|l|r|r|} \hline& \text { Arlington Co. } &{\text { Bardo Co. }} \\\hline \text { Revenues } & 100.0 \% & 100.0 \% \\\hline \text { Cost of sales } & 42.1 \% & 47.8 \% \\\hline \text { Gross profit } & 57.9 \% & 52.2 \% \\\hline \text { Selling and general expenses: } & &\\\hline \text { Sales and marketing expense } & 26.3 \% & 8.6 \% \\\hline \text { General and administrative expense } & 12.0 \% & 10.8 \% \\\hline \text { Research and development expense } & 4.1 \% & 10.2 \% \\\hline \text { Total selling and general expenses } & 42.4 \% & 29.6 \% \\\hline & & \\\hline \text { Profit before tax } & 15.5 \% & 22.6 \% \\\hline \text { Income tax expense } & 3.3 \% & 5.8 \% \\\hline \text { Profit (loss) } & 12.2 \% & 16.8 \% \\\hline\end{array}$ Which of the following statements can be correctly concluded from the above data?

A) Bardo places a higher priority on research and development than Arlington.
B) Bardo's total selling and general expenses are lower than Arlington's.
C) Bardo produces higher gross profit per dollar of sales than Arlington.
D) Bardo Company produced higher total profit than Arlington.