Canceco Company produces and sells pillows. It expects to sell 10,000 pillows in the year 2005 and had 1,000 pillows in finished goods inventory at the end of 2004. Canceco would like to complete operations in the year 2005 with at least 1,250 completed pillows in inventory. There is no ending work-in-process inventory. The pillows sell for £5 each. What would be the total sales for the year 2005?
A) £50,000
B) £55,000
C) £56,250
D) £51,250

Question

Quizplus · Accepted Answer

The total sales for the year 2005 are calculated based on the expected sales volume, not the ending inventory. Since Canceco expects to sell 10,000 pillows at £5 each, the total sales would be 10,000 pillows * £5/pillow = £50,000. The information about inventory is not relevant to calculating sales revenue.

Canceco Company Produces and Sells Pillows