Technology Team manufactures laptops that sell for \(\$ 2,200\) each. Assume Technology Team does not maintain an inventory; all items produced are sold during the period. Thus, all production costs appear on the income statement. The company has fixed manufacturing overhead of \(\$ 4,000,000\) per year. The company's fixed selling and administrative expense is \(\$ 3,000,000\) per year. Other expenses are as follows:

Management at Technology Team believe sales for 2005 will be 10,000 units.
\section*{Required}
A. Create a pro forma income statement using Exhibit 3 as a guide.
B. Discuss how a pro forma income statement helps managers make better decisions.

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Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense Cost per Unit $1,200 150 50 30