Pro Forma Income Statement
Technology Team manufactures laptops that sell for $2,200 each. Assume Technology Team does not maintain an inventory; all items produced are sold during the period. Thus, all production costs appear on the income statement. The company has fixed manufacturing overhead of $4,000,000 per year. The company's fixed selling and administrative expense is $3,000,000 per year. Other expenses are as follows:
Cost per Unit
Direct materials $1,200
Direct labor 150
Variable manufacturing overhead 50
Variable selling and administrative expense 30
Management at Technology Team believe sales for 2005 will be 10,000 units.
A. Create a pro forma income statement using Exhibit 3 as a guide.
B. Discuss how a pro forma income statement helps managers make better decisions.
https://brainmass.com/business/income-statement/pro-forma-income-statement-261122
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A. Create a pro forma income statement using Exhibit 3 as a guide.
Pro Forma Income Statement
For the Quarter Ended March 31, 2005 in$
Panel A
Sales (Sales Price *Units to be Sold) 22000000
Less :
Direct Material 12000000
Direct Labor 1500000
Variable Manufacturing overhead 500000
Fixed Manufacturing ...
Solution Summary
Response helps in computing Pro Forma Income Statement
How do financial executives use pro forma financial statements?
How do financial executives use pro forma financial statements? How do organizational goals influence the preparation and evaluation of pro forma financial statements? What are some examples of decisions that result from proforma financial statements? When preparing pro forma financial statements, how does data selection eventually relate to legal and ethical considerations?
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