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At January 1, 2020, Jake, Inc.has beginning inventory of 4,000 surfboards.Jake estimates it will sell 15,000 units during the first quarter of 2020 with a 10% increase in sales each quarter.Jake's policy is to maintain an ending inventory equal to 25% of the next quarter's sales.Each surfboard costs $200 and is sold for $250.
-How much is budgeted sales revenue for the third quarter of 2020?
A)$18,150
B)$4,537,500
C)$907,500
D)$3,750,000

Question

Use the following information for questions 
At January 1, 2020, Jake, Inc.has beginning inventory of 4,000 surfboards.Jake estimates it will sell 15,000 units during the first quarter of 2020 with a 10% increase in sales each quarter.Jake's policy is to maintain an ending inventory equal to 25% of the next quarter's sales.Each surfboard costs $200 and is sold for $250.
-How much is budgeted sales revenue for the third quarter of 2020?
A)$18,150
B)$4,537,500
C)$907,500
D)$3,750,000

Quizplus · Accepted Answer

To calculate the budgeted sales revenue for the third quarter of 2020, first, we need to determine the number of units Jake, Inc. expects to sell in that quarter. The sales pattern is a 10% increase each quarter from an initial 15,000 units in the first quarter. First quarter sales: 15,000 unitsSecond quarter sales: 15,000 units * 110% = 16,500 unitsThird quarter sales: 16,500 units * 110% = 18,150 unitsThe sales price per surfboard is $250, so the budgeted sales revenue for the third quarter is 18,150 units * $250 = $4,537,500.

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