Over the last few years, Mohawk Industries has operated with a gross profit rate of 35%. On January 1, 2012, the company had inventory on hand with a cost of $750,000. Purchases of merchandise during January amounted to $215,000, and sales for the month were $480,000. Using the gross profit method, what is the estimated inventory at January 31

$653,000

Explanation:

When using the gross profit approach, the first step is to calculate the cost of goods available for sale

cost of goods available for sale is Beginning stock for plus purchases

For Mohawk industries

Beginning stock is  $750,000

purchases in the month  $215,000

Goods available for sales$965,000

If the sales were  $480,000

gross profits 35% of sales

The gross profits was 35/100 x 480,000

= $168,000

The cost of goods sold was

=$480,000 -$168,000

=$312,000

Costs of goods available for sale is $965,000

The costs of goods sold are $312,000

estimated ending inventory is $965,000 -$312,000

=$653,000

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation: