The pro forma income statement for a cost reduction project:
A)will reflect a reduction in the sales of the firm.
B)will generally reflect no incremental sales.
C)has to be prepared reflecting the total sales and expenses of the entire firm.
D)cannot be prepared due to the lack of any project related sales.
E)will always reflect a negative project operating cash flow.

Question

Quizplus · Accepted Answer

A pro forma income statement for a cost reduction project typically reflects no incremental sales, as the focus is on reducing expenses rather than increasing sales. However, it will show the impact of cost reductions on the overall profitability of the firm.

The Pro Forma Income Statement for a Cost Reduction Project