At January 1, 2013, Deer Corp.has beginning inventory of 2,000 surfboards.Deer estimates it will sell 10,000 units during the first quarter of 2013 with a 12% increase in sales each quarter.Deer's policy is to maintain an ending inventory equal to 25% of the next quarter's sales.Each surfboard costs $100 and is sold for $150.How much is budgeted sales revenue for the third quarter of 2013?
A)$450,000
B)$1,950,000
C)$1,881,600
D)$12,544

Question

Quizplus · Accepted Answer

The sales for the first quarter are 10,000 units. With a 12% increase each quarter, the second quarter sales are 11,200 units (10,000 * 1.12), and the third quarter sales are 12,544 units (11,200 * 1.12). The budgeted sales revenue for the third quarter is 12,544 units * $150 = $1,881,600.