Q1: Arab company's income statement for the year ended December 31, 2019, is given below, along with a breakdown of the firm's cost of goods sold and operating expenses into their fixed and variable components. The firm estimates that its sales in 2020 will be $1.5 million. Interest expense is expected to remain unchanged at $35,000. b. Use fixed and variable cost data to develop a pro forma income statement for the year ended December 31, 2020. 5 marks Income Statement for the year 2019 Sales revenue $1,400,000 Less: Cost of goods sold 910,000 Gross profits $ 490,000 1 Less: Operating expenses 120,000 Operating profits $ 370,000 Less: Interest expense 35,000 Net profits before taxes $ 335,000 Less: Taxes (rate = 40%) 134,000 Net profits after taxes $ 201,000 Breakdown of Costs and Expenses into Fixed and Variable Components Cost of goods sold Fixed cost $210,000 Variable cost 700,000 Total costs $910.000 Operating expenses Fixed expenses $ 36,000 Variable expenses 84,000 Total expenses $120,000