Using vertical common-size analysis of the income statement of Tab for 2005, the cost of sales relative to the benchmark is closest to:

Tab, Inc., Income Statements for Fiscal Years 2003, 2004, and 2005
Amount (in millions of dollars)
2005 2004 2003
Revenues $25,000 $22,000 $21,000
Cost of sales 20,000 18,000 17,000
Gross profit $5,000 $4,000 $4,000
Selling, general, and administrative expenses 500 500 800
Operating income $4,500 $3,500 $3,200
Interest and other nonoperating expense 200 250 250
Earnings before income taxes $4,300 $3,250 $2,950
Income tax 1,410 975 885
Net income $2,890 $2,275 $2,065
Tab, Inc., Balance Sheets as of End of Fiscal Years 2003, 2004, and 2005
Amount (in millions of dollars)
2005 2004 2003
Cash, cash equiv., and marketable securities $200 $150 $100
Accounts receivable 1,800 1,350 900
Inventories 8,000 7,500 7,000
Total current assets $10,000 $9,000 $8,000
Net property, plant, and equipment $20,000 19,000 19,000
Intangible assets 1,000 1,000 1,000
Total assets $31,000 $29,000 $28,000
Accounts payable $500 $790 $615
Debt due in one year 1,000 1,000 1,000
Long-term debt 12,000 13,000 14,000
Shareholders’ equity 17,500 14,210 12,385
Total liabilities and equity $31,000 $29,000 $28,000
A. 75%.
B. 80%.
C. 85%.

Ans: B. 80%.