Question

A proposed new investment has projected sales of $850,000. Variable costs are 60 percent of sales, and fixed costs are $174,000; depreciation is $75,000. Prepare a pro forma income statement assuming a tax rate of 30 percent. What is the projected net income

Answer 1

• 63,700

Step-by-step explanation:

Sales: 850,000

Variable Cost: (850,000*60%) = 510,000

Contribution Margin = 850k-510k= 340,000

Fixed cost = 174,000

Depreciation = 75,000

Earnings Before Taxes = 91,000

Taxes (30%) = (27,300)

Net Income 63,700