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.