PC Connection is a leading mail order retailer of personal computers. A recent financial report issued by the company revealed the following information:

Merchandise inventory (beginning of the year)..........$69 million

Merchandise inventory (end of the year)............. $57 million

Net sales for the year....................$1.2 billion

Gross profit margin......................11%

a. Compute the company’s cost of goods sold for the year.

b. Approximately how much inventory did PC Connection purchase during the year?

c. What factors might contribute to the company’s low gross profit margin?

d. Discuss reasons why PC Connection uses a perpetual inventory system.