Question

If a sales increase is forecasted, how will it affect expenses on the pro forma income statement if market conditions are expected to remain stable? There will be no effect on expenses. Expenses will decrease. It depends on the type of product being sold. Expenses will increase.

Answer 1

Expenses will increase.

Step-by-step explanation:

In this method, the revenue should be rised according to the forecasting method also the expense contains the similar percentage of revenue that was for the previous periods

So in the case when the revenue is increased so the expense should also be increased with the real terms

Therefore the last option is correct