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:
$$\begin{array} { | l | r | r | } \hline & \text { Arlington Co. } & { \text { Bardo Co. } } \\\hline \text { Revenues } & 100.0 \% & 100.0 \% \\\hline \text { Cost of goods sold } & 42.1 \% & 47.8 \% \\\hline \text { Gross Profit } & 57.9 \% & 52.2 \% \\\hline \text { Operating expenses: } & & \\\hline \text { Sales and marketing expense } & 26.3 \% & 8.6 \% \\\hline \text { General and administrative expense } & 12.0 \% & 10.8 \% \\\hline \text { Research and development expense } & 4.1 \% & 10.2 \% \\\hline \text { Total operating expenses } & 42.4 \% & 29.6 \% \\\hline & & \\\hline \text { Income before income tax } & 15.5 \% & 22.6 \% \\\hline \text { Income tax expense } & 3.3 \% & 5.8 \% \\\hline \text { Net income(loss) } & 12.3 \% & 16.8 \% \\\hline\end{array}$$
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Which of the following statements can be correctly concluded from the above data?

A) Arlington's cost of goods sold is lower than Bardo's on a per unit basis.
B) Arlington produces a higher amount of gross profit than Bardo.
C) Arlington makes less total net income than Bardo.
D) Bardo has more effective cost control than Arlington in the area of operating expenses.