Study the financial information for reel mower units that James Colburn prepared for Rick Martino. Prepare a pro-forma income statement (labeled Table 1) assuming no changes in accounting policy for 2008 and assuming that the company sells 10,000 units each quarter at a selling price of $2,000 per unit (for a total of 40,000 units during the year). Also, assume selling, general and administrative expenses are the same as they were in 2007. If Rick Martino reports this result, do you think he would keep his job?
