Question

A department store has budgeted sales of 12,800 men's coats in September. Management wants to have 6,800 coats in inventory at the end of the month to prepare for the winter season. Beginning inventory for September is expected to be 4,800 coats. What is the dollar amount of the purchase of suits if each coat has a cost of $83.

Answer 1

Answer:

Dollar amount of purchases is 1,228,400.

Explanation:

Total purchase of suits is equal to Inventory at the end plus sales minus inventory at the beggining.

• Inventory at the beggining is 4,800
• Inventory at the end (management desire) = 6,800
• Budgeted sales = 12,800
• Purchase of suits = 6,800 + 12,800 - 4,800 = 14,800

The explanation is if i have 4,800 units at the beggining, and i want to sell 12,800, i will need to purchase the difference (8,000 units). Plus the existence needed at the end, 8,000 + 6,800 = 14,800.

The cost per unit is $83, so the total cost is 14,800 * 83 = 1,228,400.