ABC Company, an outdoor furniture manufacturer, has decided to introduce a new, lightweight lawn chair to the market in the Spring of 2019. This product is new to ABC because for the last 50 years the company has focused on selling picnic tables wholesale. This product will be sold directly to retail stores by a newly formed sales force. As part of the New Product Team you will need to conduct some initial business analysis. Your team is putting together a pro-forma income statement. Use the below data to create an income statement for the first quarter of 2019. Marketing has projected that is will cost $85,000 a quarter to support a sales force. The initial up front cost will be $150,000 to create this new sales department (these monies will be secured with a $1,000,000 loan that ABC will get at 3.5% interest or $8,750 a quarter). Marketing also has projected that advertising will cost approximately $8,000/qtr. Salaries for the new sales force and the additional factory workers $240,000/qtr. Sales people earn 35 cents per chair as a commission/bonus. The retail price of the new product has been determined to be $40, $38, or $35. ABC will sell the chairs wholesale direct to retailers for $22, $20, or $17 respectively. The price will be determined once a business analysis has been conducted. ABC's COGS is 40% of wholesale-no matter what the final price. Review the below income statement and answer the questions below. Sales 5% EOGS E Gross Profit Marketing Advertising Commissions - Total Expenses -Salaries 1.7 Earnings Before Interest and Taxes- -Interest- Earnings before taxes- -Taxes (18%)- Net Income Estimating Sales Last year the competition sold approximately 8,000,000 chairs of this type. That volume was split up nearly equally between 15 domestic and overseas competitors (each having a market share of approximately 6.7%). The market is expected to grow by 5% each year over the next few years. Based on new competitors entering the market, ABC believes that it is safe to say that they can capture at least 2%, 4%, and 6.5% of the market during their three quarters (respectively) with the new chair. ABC is confident, that with a dedicated sales force, these numbers are achievable. (For the sake of simplicity, assume that sales are not cyclical). Corporate would like to see pro-forma income statements for the 1st three quarters before they make a decision on whether or not to move ahead with production. Remember that ABC will be introducing a new product to an existing market. Use the above income statement template to create your estimated income statements