Question

Mary's Baskets Company expects to manufacture and sell 30,000 baskets in 2019 for $5 each. There are 4,000 baskets in beginning finished goods inventory with target ending inventory of 9.000 baskets. The company keeps no work-in- process inventory. What amount of sales revenue will be reported on the 2019 budgeted income statement? A) $175,000 B) $150,000 C) $125,000 D) $55,000

Answer 1

C $125,000

Step-by-step explanation:

With regards to the above information, we know that the beginning and ending target inventory is the same, hence the units sold by Mary's baskets will remain at 30,000.

Sales in unit = Opening inventory in units + Production - Closing inventory

Sales in unit = 4,000 + 30,000 - 9,000

Sales in unit = 25,000

We do know that revenue is a function of sales multiplied by the selling price, which is given as $5 each.

Sales revenue = Sales in unit × Selling price

Sales revenue = 25,000 × $5

Sales revenue = $125,000

Therefore, the amount of sale revenue that would be reported on the 2019 budget income statement is $125,000