Pro forma income statement analysisAllen Products, Inc., wants to do a scenario analysis for the coming year. The pessimistic prediction for sales is $ 906000; the most likely amount of sales is $1128000; and the optimistic prediction is $ 1275000. Allen's income statement for the most recent year is shown here a. Use the percent-of-sales method, the income statement for December 31, 2015, and the sales revenue estimates to develop pessimistic, most likely, and optimistic pro forma income statements for the coming year. b. Explain how this method could result in overstatement of profits for the pessimistic case and understatement of profits for the most likely and optimistic cases. c. Restate the pro forma income statements prepared in part a. to incorporate the following assumptions about the 2015 costs: $ 244515 of the cost of goods sold is fixed; the rest is variable. $ 168644 of the operating expenses is fixed; the rest is variable. All the interest expense is fixed. (Please see:) d. Compare your findings in part c. to your findings in part a. Do your observations confirm your explanation in part b?

.) Allen Products, Inc. Income Statement for the Year Ended December 31, 2015 Sales revenue $937,100 Less: cost of good sold 417,947 Gross profits $519,153 Less: operating expenses 229,590 Operating profits $289,563 Less: interest expense 32,799 Net profit before taxes $256,764 Less: taxes (rate 30%) 77,029 Net profits after taxes $179,735 Allen Products, Inc. Income Statement for the Year Ended December 31, 2015 Sales revenue $937,100 Less: cost of good sold Fixed 244,515 Variable 173,432 Gross profits $519,153 Less: operating expenses Fixed 168,644 Variable 60,946 Operating profits $289,563 Less: interest expense 32,799 Net profit before taxes $256,764 Less: taxes (rate 30%) 77,029 Net profits after taxes $179,735 .) Allen Products, Inc. Income Statement for the Year Ended December 31, 2015 Sales revenue $937,100 Less: cost of good sold 417,947 Gross profits $519,153 Less: operating expenses 229,590 Operating profits $289,563 Less: interest expense 32,799 Net profit before taxes $256,764 Less: taxes (rate 30%) 77,029 Net profits after taxes $179,735 Allen Products, Inc. Income Statement for the Year Ended December 31, 2015 Sales revenue $937,100 Less: cost of good sold Fixed 244,515 Variable 173,432 Gross profits $519,153 Less: operating expenses Fixed 168,644 Variable 60,946 Operating profits $289,563 Less: interest expense 32,799 Net profit before taxes $256,764 Less: taxes (rate 30%) 77,029 Net profits after taxes $179,735