Acompany had sales revenue of $800,000 for the year. in addition, the following information is available related to the cost of the units sold: gross profit $ 340,000 total purchase cost ? freight charges 20,000 purchase returns 80,000 operating expenses 150,000 purchase discounts 40,000 what was the total purchase cost of the units sold?

$410,000

Explanation:

Given:

Sales = $800,000

Gross profit = $340,000

Cost of goods sold = Sales - Gross profit

                              = 800,000 - 340,000

                              = $460,000

Now, Cost of goods sold = Purchases + operating expenses

Purchases = Purchase cost + freight charges - purchase returns - purchase discount

Substituting the above formula in cost of goods sold equation we get,

Cost of goods sold = (Purchase cost + freight charges - purchase returns - purchase discount) + operating expenses

460,000 = (Purchase cost + 20,000 - 80,000 - 40,000) + 150,000

460,000 = Purchase cost + 50,000

Purchase cost = $410,000

Total purchase cost is $410,000.

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