Partmate Pty Ltd is a retail business that sells car parts to customers who maintain their own cars. The company began business on t January and the acquisition of the inventory of car parts during the year involved the following amounts:
The purchase price of the merchandise……………………………………$817,500
Goods and services tax on the purchase of merchandise…………………….81,750
The cost of inwards freight on the merchandise……………………………..15,000
Trade discounts on the merchandise…………………………………………67,500
In addition to the cost of merchandise, the company incurred the following costs during the year:
Staff salaries:
Purchasing staff………………………………………………………………………$60000
Sales staff……………………………………………………………………………157,500
Delivery driver (part-time) ……………………………………………………………22,500
Rent……………………………………………………………………………………45,000
Equipment depreciation and insurance…………………………………………………7,500
Telephone………………………………………………………………………………4,950
Computer software and hardware depreciation (inventory management system)……22,500
Data transfer (EDI order system) ……………………………………………………..9,000
Stationery and other consumables…………………………………………………….4,500
Electricity……………………………………………………………………………..7,200
Required:
1. Estimate the cost of inventory purchased during the year.
2 Prepare an income statement for the company for the year assuming that, in pricing goods for sale, the company adds a markup of 8o per cent on cost and that 90 per cent of the value of the inventory purchased during the year was sold.
3. Suggest three ways in which the company could refine its costing system to provide more useful information for managing its resources and creating value for its owners.
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