At the Beginning of 2011, Midway Hardware Has an Inventory

question 29

Multiple Choice

At the beginning of 2011, Midway Hardware has an inventory of $400,000. Because sales growth was strong during 2011, the owner wants to increase inventory on hand to $450,000 at December 31, 2011. If net sales for 2011 are expected to be $1,600,000, and the gross profit rate is expected to be 35%, compute the cost of the merchandise the owner should expect to purchase during 2011.

• A) $1,490,000.
• B) $1,040,000.
• C) $1,090,000.
• D) $1,600,000.

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Definitions:

Foreign Goods

Products or services that are produced in one country and sold in another, outside the country of origin.