Problem 14-21A (Algo) Preparing pro forma income statements with different assumptions LO 14-6 Top executive officers of Perez Company, a merchandising firm, are preparing the next year's budget. The controller has provided everyone with the current year's projected income statement. Cost of goods sold is usually 70 percent of sales revenue, and selling and admintstrative expenses are usually 10 percent of sales plus a fixed cost of $50,000. The president has announced that the company's goal is to increuse net income by is percent. Required The following items are independent of each other: 0. Prepare a pro forma income statement. What percentage inciease in sales would erwble the company to reach its gaal? b. The market may become stagnant next year, and the compary does not expect an increase in sales revenue. The production manager belleves that an improved production procedure can cut cost of goods sold by 1 percent. Prepare a pro farma income statement still assuming the President's goal to increase net income by 15 percent. Calculate the required reduction in selling \& administrative expenses to dchieve the budgeted net income. c. The company decides to escalate its advertising campaign to boost consumer recognition, which witt increase setlirig and administralive expenses to $348,000. With the increased advertising, the company expects sales ferenue to increase by 15 percent. Assume that cost of goods sold rematis a constant proportion of sabes. Prepare a pra forma income statement. Will the company reach its goal? statement still assuming the President's goal to increase net income by 15 percent. Calculate the required reduction in selling administrative expenses to achieve the budgeted net income. c. The company decides to escalate its advertising campaign to boost consumer recognition, which will increase selling and administrative expenses to $348,000. With the increased advertising, the company expects sales revenue to increase by 15 percent. Assume that cost of goods sold remains a constant proportion of sales. Prepare a pro forma income statement. Will th company reach its goal? Complete this question by entering your answers in the tabs below. Prepare a pro forma income statement. What percentage increase in sales would enable the company to reach its goal? (Round "Percentage increase" to 2 decimal places. (1.e., .2345 should be entered as 23.45).) statement still assuming the President's goal to increase net income by 15 percent. Calculate the requlred reduction in selling \& administrative expenses to achieve the budgeted net income. - The company decides to escalate its advertising campaign to boost consumer recognition, which will increase selling and administrative expenses to $348,000. With the increased advertising. the company expects sales revenue to increase by 15 percent. Assume that cost of goods sold remains a constant proportion of sales. Prepare a pro forma income statement. Wiil the company reach its goal? Complete this question by entering your answers in the tabs below. The market may become stagnant next yeac, and the company does no expect an increase in sales reveriue. The production manager believes that an improved production procedure can cut cont of poods sold by 1 percent. Prepare a proforina income statement still ascuming the Precident's goal to increate net income by is percent. Caiculate the required reduction in selling statement still assuming the President's goal to increase net income by 15 percent. Calculate the required reduction in selling \& administrative expenses to achleve the budgeted net income. c. The company decides to escalate its advertising campaign to boost consumer recognition, which will increase selling and administrative expenses to $348,000. With the increased advertising, the company expects sales revenue to increase by 15 percent. Assume that cost of goods sold remains a constant proportion of sales. Prepare a pro forma income statement. Will the company reach its goal? Complete this question by entering your answers in the tabs below. The company decides to escalate its advertising campaign to boost consumer recognition, which will increase selling and administrative expenses to $348,000. With the increased advertising, the company expects sales revenue to increase by 15 percent. Assume that cost of goods sold remains a constant proportion of sales. Prepare a pro forma income statement. Will the company reach its goal