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A proposed new investment has projected sales of $800,000. Variable costs are 65% of sales, and...

Question:

A proposed new investment has projected sales of $800,000. Variable costs are 65% of sales, and fixed costs are $169,000; depreciation is $70,000. Prepare a pro forma income statement assuming a tax rate of 34%.

What is the projected net income? (Input all amounts as positive values. Do not round intermediate calculations.)

Financial statements

Financial statements refer to the reports which show the financial performance of the firm over a certain period. The major financial statements are the balance sheet, income statement, statement of cash flow, and the statement of owner's equity.

Answer and Explanation:

The table below displays the pro porma income statement of the firm.

Sales 800,000
COGS 520,000
Gross profit 280,000
Fixed cost 169,000
Depreciation 70,000
Operating profit 41,000
Taxes (34%) 13,940
Net income 27,060

The projected net income of the investment is $27,060


Learn more about this topic:

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What Is an Income Statement? - Purpose, Components & Format

from Accounting 101: Financial Accounting

Chapter 2 / Lesson 2
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