The best way to adjust for the presence of fixed costs when using the simplified approach for pro forma income statement preparation is
A. to proportionately vary the fixed costs with the change in sales.
B. to adjust for projected fixed‑asset outlays.
C. to disproportionately vary the costs with the change in sales.
D. to break the firm’s historical costs into fixed and variable components.
Answer:D
The best way to adjust for the presence of fixed costs when using the simplified approach for pro forma income statement preparation is
A. to proportionately vary the fixed costs with the change in sales. B. to adjust for projected fixed‑asset outlays. C. to disproportionately vary the costs with the change in sales. D. to break the firm’s historical costs into fixed and variable components.