The percent-of-sales method to preparing a pro forma income statement assumes the firm has nofixed costs. Therefore, the use of the past cost and expense ratios generally tends toprofits when sales are increasing.

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The Answer of The percent-of-sales method to preparing a pro forma income statement assumes the firm has nofixed costs. Therefore, the use of the past cost and expense ratios generally tends toprofits when sales are increasing.

The Percent-Of-Sales Method to Preparing a Pro Forma Income Statement