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Pro-forma contribution margin income statement

Explain how outsourcing would impact the pro-forma income statement. You may utilize Excel for calculations and/or presentation of financial analyses related to the assignment.
Be sure to support your position using information from the assigned text(s) reading and other sources and utilize Microsoft Excel with formulas for any calculations.

Silver Company has asked you to prepare a pro-forma income statement for the coming year. The following information is available:

Expected sales revenue $1,240,000

Manufacturing costs:
Variable cost of goods sold 625,000
fixed overhead 125,000

Selling expenses:
Variable expenses 140,000
fixed expenses 45,000

Administrative expenses:
Variable expenses 45,000
Fixed expenses 160,000

Other:
Interest expense 28,000
Income tax rate 35%

Please use Excel for calculations
Prepare a pro-forma contribution margin income statement for Silver Company.

Can you explain how outsourcing would impact the pro-forma income statement.Be sure to support your position using information from the assigned

Solution Preview

Prepare a pro-forma contribution margin income statement for Silver Company.

Silver Company
Pro-Forma Contribution Margin Income Statement
For the Year Ended December 31, 2006

Sales revenue 1240000
Less variable expenses:
Variable cost of goods sold 625000
Variable selling expenses 140000
Variable administrative expenses 45,000

Contribution margin 430000

Less fixed expenses:
Manufacturing overhead........................................ $125,000
Selling expenses..................................................... 45,000
Administrative expenses........................................ 160000 330000

Net operating income................................................... 100000
Less interest expense.................................................. 28000

Income before income taxes....................................... 72000
Income taxes (35%)...................................................... 25200

Net ...

Solution Summary

This explains the prepration of Pro-forma contribution margin income statement with the help of an example

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