Reference no: EM132793787

Adriano Company is developing its budgeted cost of goods sold for next year. Adriano has developed the following range of sales estimates and their corresponding probabilities for the year.

Sales Estimates           $1,500,000
Probability                         25%

Sales Estimates           $1,800,000
Probability                          45%

Sales Estimates             $2,400,000
Probability                           30%

Problem 1: Adriano Company's cost of goods sold averages 75% of sales. What is the expected cost of goods sold?

Option 1: $1,425,000

Option 2: $1,905,000

Option 3: $1,428,750

Option 4: $1,900,000