At the beginning of 2015, England Dresses has an inventory of $70,000. However, management wants to reduce the amount of inventory on hand to $40,000 at December 31. If net sales for 2015 are forecast at $180,000 and the gross profit rate is expected to be 18%, compute the cost of the merchandise which management should expect to purchase during 2015. (Hint: First compute the expected cost of goods sold.)

$187,600.

$117,600.

$147,600.

$110,000.