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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?

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ijaz4308

Answer:

$218,514

Explanation:

The projected net income shall be calculated as follows:

Projected sales                                                     $585,000

Less:Variable costs(44%*585,000)                     ($257,400)

Less:Fixed costs                                                 ($187,000)

Less: Depreciation                                              ($57,000)

Income before tax                                                $83,600

Less tax(83,600*21%)                                         ($17,556)

Net income                                                         $66,044

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