Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales in 2016 will be $1.62 million. Interest expense is expected to remain unchanged at

$38,000, and the firm plans to pay $71,000 in cash dividends during 2016. Metroline Manufacturing's income statement for the year ended December 31, 2015, 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 for the year ended December 31, 2016.

b. Use fixed and variable cost data to develop a pro forma income statement for the year ended December 31, 2016.

c. Compare and contrast the statements developed in parts a. and b. Which statement probably provides the better estimate of 2016 income? Explain why.

NOTE: I need to see the steps for the computation.

Cost of goods sold Fixed cost Variable cost Total cost Operating expenses Fixed expenses Variable expenses Total expenses $205,000 710000 $915,000 $40,000 76000 $116,000 Income Statement for the Year Ended December 31, 2012 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 $1,410,000 915000 $495,000 116000 $379,000 38000 $341,000 136400 $204,600 60000 $144,600