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A department store has budgeted sales of 12,400 men's suits in September. Management wants to have 6,400 suits in inventory at the end of the month to prepare for the winter season. Beginning inventory for September is expected to be 4,400 suits. What is the dollar amount of the purchase of suits if each suit has a cost of $79?

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Answer:

Purchases= $1,137,600

Explanation:

Giving the following information:

Sales= 12,400 units

Desired ending inventory= 6,400 units

Beginning inventory= 4,400 suits.

Purchasing price per unit= $79

To calculate the total cost, we need to use the following formula:

Purchases= (sales + desired ending inventory - beginning inventory)*price per unit

Purchases= (12,400 + 6,400 - 4,400)*79

Purchases= 14,400*79

Purchases= $1,137,600

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