At the beginning of 2015, Midway Hardware has an inventory of $400,000. Because sales growth was strong during 2015, the owner wants to increase inventory on hand to $450,000 at December 31, 2015. If net sales for 2015 are expected to be $1,600,000, and the gross profit rate is expected to be 35%, compute the cost of the merchandise the owner should expect to purchase during 2015.
a. $1,490,000.
b. $1,040,000.
c. $1,090,000.
d. $1,600,000.