Esther Baskets Company expects to manufacture and sell 20,000 baskets in 2016 for $5 each.There are 4,000 baskets in beginning finished goods inventory with target ending inventory of 5,000 baskets.The company keeps no work-in-process inventory.What amount of sales revenue will be reported on the 2016 budgeted income statement?

Question

Quizplus · Accepted Answer

To calculate the sales revenue, we need to find out the number of baskets to be manufactured during the year.

Total number of baskets to be manufactured = Beginning finished goods inventory + Number of baskets to be sold + Target ending inventory
Total number of baskets to be manufactured = 4,000 + 20,000 + 5,000
Total number of baskets to be manufactured = 29,000

Sales revenue = Number of baskets to be sold × Price per basket
Sales revenue = 20,000 × $5
Sales revenue = $100,000

Therefore, the correct answer is B) $100,000.

Esther Baskets Company Expects to Manufacture and Sell 20,000 Baskets