and operating expenses into their fixed and variable components.

a$.$ Use the percent$-$of$-$sales method to prepare a pro forma income statement for next year.

b$.$ Use fixed and variable cost data to develop a pro forma income statement for next year.

c$.$ Compare and contrast the statements developed in parts a$.$ and b$.$ Which statement probably provides the better estimate of income? Explain why.

a$.$ Use the percent$-$of$-$sales method to prepare a pro forma income statement for the year ended December $31,2020.$

Complete the pro forma income statement for the year ended December $31,2020$ below: $($Round the percentage of sales to four decimal places and the pro forma income statement amounts to the

nearest dollar.$)$

Pro Forma Income Statement

Metroline Manufacturing, Inc.

for the Year Ended December $31,2020$

$($percent$-$of$-$sales method$)$

Data table

$($For Income Staement, click on the icon here in order to copy the contents of the data table into a spereadsheet.$)$

a spreadsheet.$)$