On 1 January 2010, Sally Sobers submits a business plan to her bank seeking financial assistance. Her plan is to buy ceramic vases, print decorative designs on them and sell them to the retail trade.

■ She requires a printing machine, which would cost £10,000, and may be used for five years.

■ She intends to buy 10,000 vases in the first year, and step up the purchases each year by 5,000 vases more than the previous year’s quantity, during the next three years.

■ The current purchase price per vase is £30, but the price is expected to increase by £5 per vase in each of the next three years.

■ She expects to sell not less than 8,000 vases in the first year, 14,000 in the second and 18,000 in the third. Her selling price per vase will be £40 in the first year, £45 in the second and £50 in the third.

■ She estimated that the overhead would remain at £4 per vase in each of the three years. This does not include depreciation of the machine, which is to be calculated using the straight-line method.

■ The cost of inventory on hand at the end of each year is to be calculated on the FIFO cost-flow assumption.

Required:

Prepare for Sally a forecast of her business performance in the three years commencing on 1 January 2010 assuming that all her expectations were met and ignoring interest on any finance expected from the bank.