Question

Fresno Salads has current sales of $6,000 and a profit margin of 6.5 percent. The firm estimates that sales will increase bu 4 percent next year and that costs will vary in direct relationship to sales. What is the pro forma net income?A) 303.33B)327.18C)405.60D)438.70E)441.10

Answer 1

Answer:

Pro farma net income will be $405.6

So option (C) will be correct answer

Explanation:

We have given that Fresno salads has current sales of $6000 and a profit margin of 6.5%

It is given that sales is increases by 4%

So estimated sales after increasing in sale = $6000\times (1+0.04)=6000\times 1.04=6240$

So estimated sales will be $6240

Now it is given that profit margin is 6.5 %

So pro farma net income will be $6240×0.065 = $405.6

So option (C) will be the correct option