Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales next year will be $1.65 million. Interest expense is expected to remain unchanged at $37,000, and the firm plans to pay $66,000 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 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. a. Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2020. Complete the pro forma income statement for the year ended December 31, 2020 below: (Round the percentage of sales to four decimal places and the pro forma income statement amounts to the nearest dollar.) Pro Forma Income Statement Metroline Manufacturing, Inc. for the Year Ended December 31, 2020 (percent-of-sales method) Sales Less: Cost of goods sold Fixed cost Variable cost Gross profits Less: Operating expenses Fixed expense Variable expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes Net profits after taxes Less: Cash dividends To retained earnings (For Income Staement, click on the icon here in order to copy the contents of the data table below into a spreadsheet.) (For Breakdown of Costs and Expenses, click on the icon here in order to copy the contents of the data table below into a spreadsheet.) 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 $1,398,000 for the Year Just Ended 916,000 Cost of goods sold $482,000 Fixed cost $203,000 122,000 Variable cost 713,000 $360,000 Total cost $916,000 37,000 Operating expenses $323,000 Fixed expenses $40,000 129,200 Variable expenses 82,000 $193,800 Total expenses $122,000 66,000 $127,800 Net profits after taxes Less: Cash dividends To retained earnings