Question
Fishers manufacture baseball caps. In 2017, it sold 75 000 caps. The variable cost per cap was $6. 70 % of Fishers annual sales occur
Fishers manufacture baseball caps. In 2017, it sold 75 000 caps. The variable cost per cap was $6. 70 % of Fishers annual sales occur from April to September. Starting in March, Fishers experiences a significant increase in current assets and current liabilities, which start to decrease in October.
Table 1: Selected data for Fishers for 2017 (figures in $000s)
Sales revenue | $900 |
Fixed cost | $55 |
Table 2: Selected forecasted financial information for Fishers for 2018
Increase in number of baseball caps sold | 10% |
Increase in variable cost per cap | $1.00 |
Fixed cost | $55 000 |
Interest | $ 30 000 |
Income tax expense | 20% of net profit before tax |
Sales price per cap will remain the same as in 2017.
- Define the term current assets.
- Using Table 1, calculate Fisherss net profit before interest and tax for 2017 (show all your working).
- Using Table 2, calculate the following forecasted figures for 2018: sales revenue.
- Using Table 2, calculate the following forecasted figures for 2018: total variable costs.
- Using Table 2, calculate the following forecasted figures for 2018: income tax.
- Using Table 2, calculate the following forecasted figures for 2018: net profit after interest and tax.
- Explain why Fishers experiences a significant increase in current assets and current liabilities from March to October.
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