Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales next vear will be $1.54 million. Interest expense is expected to remain unchanged at $37,000, and the firm plans to pay $68,000 in cash dividends. Metroline Manufacturing's income statement for the previous year is given , along with a breakdown of the firm's cost of goods sold and operating expenses into their fixed and variable components. a. Use the percent-of-sales method to prepare a pro forma income statement for next year. b. Use fixed and variable cost data to develop a pro forma income statement for next year. c. Compare and contrast the statements developed in parts a. and b. Which statement probably provides the better estimate of income? Explain why. (Poraasaramaa Sales $ % Less: Cost of goods sold Gross profits $ Less: Operating expenses % Operating profits $ Less: Interest expense Net profits before taxes $ Less: Taxes Net profits after taxes $ Less: Cash dividends To retained earnings $
Data Table Pro forma income statement The plans to pay $68,000 in cash dividend and variable components. hunchanged at $37,000, and the firm operating expenses into their fixed (For Income Staement, click on the icon here in order to copy the contents of the data table below into a spreadsheet.) a. Use the percent-of-sales method to b. Use fixed and variable cost data to c. Compare and contrast the stateme (For Breakdown of Costs and Expenses, click on the icon here in order to copy the contents of the data table below into a spreadsheet.) a. Use the percent-of-sales method to Complete the pro forma income state int amounts to the nearest dollar.) Pro Forma Metroline N for the Year End (percent- Metroline Manufacturing Income Statement for the Year Just Ended Sales revenue Less: Cost of goods sold Gross profits Less: Operating expenses Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate = 40%) Net profits after taxes Less: Cash dividends To retained earnings Metroline Manufacturing Breakdown of Costs and Expenses into Fixed and Variable Components $1,404,000 for the Year Just Ended 900,000 Cost of goods sold $504,000 Fixed cost $217,000 120,000 Variable cost 683,000 $384,000 Total cost $900,000 37,000 Operating expenses $347,000 Fixed expenses $36,000 138,800 Variable expenses 84,000 $208,200 Total expenses $120,000 67,000 $141,200 Sales Less: Cost of goods sold Gross profits Less: Operating expenses Operating profits Enter any number in the edit fields Print Done Done