Question

A proposed new investment has projected sales of $515,000. Variable costs are 44 percent of sales, and fixed costs are $128,500; depreciation is $49,750. Prepare a pro forma income statement assuming a tax rate of 24 percent. What is the projected net income?

Answer 1

Answer:

Net operating income= $83,714

Explanation:

Giving the following information:

Sales= $515,000.

Variable costs are 44 percent of sales

Fixed costs are $128,500

Depreciation is $49,750.

Tax=  24 percent.

Income statement:

Sales= 515,000

Total variable cost= (0.44*515,000)= (226,600)

Gross profit= 288,400

Fixed costs= (128,500)

Depreciation= (49,750)

Operating income= 110,150

Tax= 110,150*0.24= (26,436)

Net operating income= 83,714