Final answer:
To find Vulcan plc's total purchases, we calculate the cost of goods sold (COGS) using the sales figures and mark-up, and adjust for the change in inventory. None of the options provided (£3,500,000, £3,920,000, £4,160,000, £4,420,000) match the calculated value of £3,440,000, indicating a possible mistake in the question.
Step-by-step explanation:
To calculate the total of the company's purchases during the year ended 31 December 20X8, we first need to determine the cost of goods sold (COGS). Vulcan plc had sales totaling £4,200,000 and a mark-up of 25% on cost. The formula to calculate the cost from the sales and mark-up is Cost = Sales / (1 + Mark-up). Therefore, the COGS is £4,200,000 / (1 + 0.25), which gives us £3,360,000.
Next, we consider the change in inventory levels. The inventory at the start of the year was £600,000 and at the end of the year it was £680,000. The increase in inventory level (£80,000) needs to be added to the COGS to find out the total purchases.
Finally, we add the COGS to the increase in inventory to find the total purchases of the company:
£3,360,000 (COGS) + £80,000 (Increase in Inventory) = £3,440,000
However, none of the options provided match the calculated total purchases of £3,440,000, suggesting there may be an error or typo in the question or choices provided.