Question: Complete the revised pro forma income statement below. In the process, refer back to Figure 2, the original pro forma income statement for 2014 and

Complete the revised pro forma income statement below. In the process, refer back to Figure 2, the original pro forma income statement for 2014 and the assumptions in Table 1. The new statement you are developing below will be referred to as Figure 4 for purposes of reference.

Figure 4 GENUINE MOTOR PRODUCTS Revised Pro forma Income Statement For 2014 Sales (1,000,000 units @ $30 per unit) ............................. $30,000,000 Fixed costs* ................................................................. 5,800,000 Total variable costs (1,000,000 units @ $18.80 per unit Operating income (EBIT) ................................................ Interest (10.75% x $12,000,000).................................... Earnings before taxes ...................................................... Taxes (35%) ................................................................ Earnings after taxes ......................................................... Shares ............................................................................ 2,320,000 Earnings per share ........................................................... $ 1.15 * Fixed costs include $2,800,000 in depreciation

Figure 2 GENUINE MOTOR PRODUCTS Pro Forma Income Statement For 2014 Sales (1,000,000 units @ $30 per unit) ....................... $30,000,000 Fixed costs*........................................................... 2,000,000 Total variable costs (1,000,000 units @ $25 per unit 25,000,000 Operating income (EBIT) .......................................... $ 3,000,000 Interest (10.75% x $2,000,000) ............................... 215,000 Earnings before taxes ................................................ $ 2,785,000 Taxes (35%) .......................................................... 974,750 Earnings after taxes................................................... $ 1,810,250 Shares ...................................................................... 2,000,000 Earnings per share..................................................... $ .91 * Fixed costs include$1,000,000 in depreciation

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