for consolidated statements of operations prepare a vertical common size analysis fo 642792

BEARING FRUIT

Apple Inc.* presented this selected financial data with its 2008 annual report.

CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except share amounts which are reflected in thousands and per share amounts)
Three fiscal years ended September 27, 2008	2008	2007	2006
Net sales	$32,479	$24,006	$19,315
Cost of sales (1)	21,334	15,852	13,717
Gross margin	11,145	8,154	5,598
Operating expenses:
Research and development (1)	1,109	782	712
Selling, general, and administrative (1)	3,761	2,963	2,433
Total operating expenses	4,870	3,745	3,145
Three fiscal years ended September 27, 2008	2008	2007	2006
Operating income	6,275	4,409	2,453
Other income and expense	620	599	365
Income before provision for income taxes	6,895	5,008	2,818
Provision for income taxes	2,061	1,512	829
Net income	$4,834	$3,496	$1,989
Earnings per common share:
Basic	$5.48	$4.04	$2.36
Diluted	$5.36	$3.93	$2.27
Shares used in computing earnings per share:
Basic	$881,592	$864,595	$844,058
Diluted	$902,139	$889,292	$877,526
(1) Includes stock based compensation expense as follows:
Cost of sales	$80	$35	$21
Research and development	$185	$77	$53
Selling, general, and administrative	$251	$130	$89

Required

a. 1. For consolidated statements of operations, prepare a horizontal common size analysis for 2006–2008. Use 2006 as the base.

2. Comment on the results in (1).

b. 1. For stock based compensation expense, prepare a horizontal common size analysis for 2006–2008. Use 2006 as the base.

2. Comment on the results in (1).

3. Comment on any distortion by using 2006 as the base. (This relates to a.1 and b.1)

c. 1. For consolidated statements of operations, prepare a vertical common size analysis for 2006– 2008. Use net sales as the base.