Forecasting the Income Statement

Target volume, price, and contribution margin per unit are the key inputs to a sales forecast.

Production schedule can be divided into raw materials, work in process, finished goods and goods for resale.

COGS is difficult to forecast due to the sheer amount of expenses included and differing methods of estimating each.

Other expenses include SG&A, depreciation, amortization, R&D, finance costs, income tax expense, discontinued operations expenses.

A pro forma income statement is planned and prepared in advance to of a transaction to project the future status of the company.