For 2015, Engels Industries Inc. initiated a sales promotion campaign that included the expenditure of an additional $40,000 for advertising.

For 2015, Engels Industries Inc. initiated a sales promotion campaign that included the expenditure of an additional $40,000 for advertising. At the end of the year, Diane Heaney, the president, is presented with the following condensed income statement:

Instructions

1. Prepare an income statement for the two-year period, presenting an analysis of each item in relationship to net sales for each of the years. Round to one decimal place.

2. Was the advertising campaign successful? Did the additional cost result in a proportionate increase in net income?