Question:
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: 30% .
Fixed Costs: $125,000 .
Income taxes: 15% .
Interest Expense: $200,000 .
In year 2, Price per unit increases to $11.50, and unit of sales increases by 5%, all other assumptions remain the same.