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.

P4-16 (similar to) Question Help . Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales next year will be $1.52 million. Interest expense is expected to remain unchanged at $32,000, and the firm plans to pay $72,000 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 fo b. Use fixed and variable cost data to develop a pro forma income statement fo c. Compare and contrast the statements developed in parts a. and b. Which sta Data Table Sales $ % (For Breakdown of Costs and Expenses, click on the icon here e in order to copy the contents of the data table below into a spreadsheet.) $ % $ 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 32.000 $ 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 $1,393,000 for the Year Just Ended 914,000 Cost of goods sold $479,000 Fixed cost $200,000 126,000 Variable cost 714,000 $914,000 32,000 Operating expenses $321.000 Fixed expenses $37,000 128,400 Variable expenses 89,000 $ 192,600 Total expenses $126,000 64,000 $128,600 $ $353,000 Total cost Enter any number in the edit fields and then click Check Answer. 2 parts remaining