Pro forma income statement-Scenario analysis Allen Products LP, wants to do a scenario analysis for the coming year. The pessimistic prediction for sales is $905,000; the most likely amount of sales is $1,120,000, and the optimistic prediction is $1,271,000 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, 2019, 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 2019 costs: $271,115 of the cost of goods sold is fixed; the rest is variable. $160,498 of the operating expenses is fixed, the rest is variable. All the interest expense is fixed. (Please see: EES d. C pare 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, 2019 $936,700 Sales revenue Less: cost of good sold 271,115 172,881 $492,704 Fixed Variable Gross profits Less: operating expenses Fixed Variable Operating profits Less: interest expense Net profit before taxes Less: taxes (rate 30%) Net profits after taxes 160,498 51,196 $281,010 29,038 5251,972 75,592 $176,380 Allen Products, Inc. Income Statement for the Year Ended December 31, 2019 Sales revenue Less: cost of good sold Gross profits Less: operating expenses Operating profits Less: interest expense Net profit before taxes Less: taxes (rate 30%) Net profits after taxes 5936,700 443,996 S492,704 211,694 281,010 29,038 5251,972 75,592 $176,380