The best way to adjust for the presence of fixed costs when using a simplified approach for pro forma income statement preparation is to break the firm's historical costs into fixed, semi-variable, and variable components and make the forecast using this relationship.

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The best way to adjust for the presence of fixed costs when using a simplified approach for pro forma income statement preparation is to assume that fixed costs will remain constant and only adjust for changes in variable and semi-variable costs. Breaking historical costs into fixed, semi-variable, and variable components can be a more complex approach for forecasting and may not be necessary for a simplified pro forma statement.

The Best Way to Adjust for the Presence of Fixed