Question
Construct a proforma income statement using the information given below. Ernies Echos, Inc. (EEI), projects unit sales for a new six-octave voice emulation implant as
Construct a proforma income statement using the information given below.
Ernies Echos, Inc. (EEI), projects unit sales for a new six-octave voice emulation implant as follows:
Year | Unit Sales |
1 | 110,000 |
2 | 127,000 |
3 | 115,000 |
4 | 98,000 |
5 | 92,000 |
6 | 75,000 |
Total xed costs are $1,850,000 per year, variable production costs are $315 per unit, and the units are priced at $455 each. The equipment needed to begin production has an installed cost of $27,500,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualies as seven-year MACRS property. EEI is in the 22 percent marginal tax bracket. Construct the proforma income statement (using Excel) to compute net income and operating cash flow.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started