Question

A department store has budgeted sales of 12,000 men's coats in September. Management wants to have 6,000 coats in inventory at the end of the month to prepare for the winter season. Beginning inventory for September is expected to be 4,000 coats. What is the dollar amount of the purchase of suits if each coat has a cost of $75?

A. $1,200,000.
B. $1,350,000.
C. $750,000.
D. $900,000.
E. $1,050,000.

Answer 1

The answer is E) $1050000

Step-by-step explanation:

We have opening stock of 4000 units. We know that we require to have 6000 units stock on hand at the end of the month. Budgeted sales are 12000 units.

If we come up with a formula Purchases + opening inventory - sales = 6000 units we can determine the amount we need to purchase to satisfy the requirement of having 6000 units on hand.

Purchases = 6000 + 12000 - 4000

=14000

14000 x 75 = $1050000

Therefore the answer is E. $1050 000