A proposed new investment has projected sales of $585,000. Variable costs are 44 percent of sales, and fixed costs are $187,000;

Question

nataly862011 [7]

3 years ago

13

A proposed new investment has projected sales of $585,000. Variable costs are 44 percent of sales, and fixed costs are $187,000;

depreciation is $51,000. Prepare a pro forma income statement assuming a tax rate of 21 percent. What is the projected net income? (Input all amounts as positive values.)

Business

1 answer:

Tema [17] · Answer 1 · 2022-06-21T16:16:27+03:00

Answer:

The projected Net Income is $70,784

Explanation:

The Pro- forma income Statement

Working Note:

Variable cost = Sales × 44%

= $585,000 × 44%

= $257,400

EBT (Earnings before Tax) = Sales - Variable cost - fixed cost - depreciation

= $585,000 - $257,400 - $187,000 - $51,000

= $89,600

Net Income = EBT × Tax rate

= $89,600 × 21%

= $70,784