Philip Enterprises, distributor of compact disks (CDs)

is developing its budgeted cost of goods sold for 2010.

Philip has developed the following range of sales estimates and associated probabilities for the year.

Sales Estimate Probability

$ 60,000 25%

85,000 40%

100,000 35%

Philip’s cost of goods sold averages 80% of sales. What is the expected value of Philip’s 2010 budgeted cost of goods sold?

a. $85,000

b. $84,000

c. $68,000

d. $67,200