Fishers manufacture baseball caps

Subject:FinancePrice: Bought3

Share With

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.

1. Define the term current assets.
2. Using Table 1, calculate Fishers’s net profit before interest and tax for 2017 (show all your working).
3. Using Table 2, calculate the following forecasted figures for 2018: sales revenue.
4. Using Table 2, calculate the following forecasted figures for 2018: total variable costs.
5. Using Table 2, calculate the following forecasted figures for 2018: income tax.
6. Using Table 2, calculate the following forecasted figures for 2018: net profit after interest and tax.
7. Explain why Fishers experiences a significant increase in current assets and current liabilities from March to October.