Construct a pro forma income statement for the first year and second year for the following assumptions:
-Units of Sales in Year 1: 110,000
-Price per Unit: $11
-Variable cost per unit: 25%
-Fixed Costs: $129,000
-Income taxes: 20%
-Interest Expense: $170,000
In year 2, Price per unit increases to $13.50, and unit of sales increases by 4%, all other assumptions remain the same.
Please refer attached file for better clarity.
Proforma Income Statement
Year 1 Year 2
Solution demonstrates the pro forma income statement for two years in the given case.