The marketing department of Metroline Manufacturing estimates that its sales in 2020 will be $ 1.51 million. Interest expense is expected to remain unchanged at $ 36 comma 000, and the firm plans to pay $ 70 comma 000 in cash dividends during 2020. Metroline Manufacturing's income statement for the year ended December 31, 2019, is given LOADING..., 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, 2020. b. Use fixed and variable cost data to develop a pro forma income statement for the year ended December 31, 2020. c. Compare and contrast the statements developed in parts a. and b. Which statement probably provides the better estimate of 2020 income? Explain why.?

Metroline Manufacturing

Income Statement

for the Year Ended December 31, 2012

Sales revenue $1,394,000

Less: Cost of goods sold 915,000

Gross profits $479,000

Less: Operating expenses 118,000

Operating profits $361,000

Less: Interest expense 36,000

Net profits before taxes $325,000

Less: Taxes (rate = 40%) 130,000

Net profits after taxes $195,000

Less: Cash dividends 69,000

To retained earnings $126,000

Metroline Manufacturing Breakdown of Cost and Expenses into fixed variable components for the year ended Decemeber 31,2019

Cost of goods sold

Fixed cost $208,000

Variable cost 707,000

Total cost $915,000

Operating expenses

Fixed expenses $39,000

Variable expenses 79,000

Total expenses $118,000