EXERCISE 6.3 Understanding Inventory Cost Flows 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) $79 million Merchandise inventory (end of the year) $91 million Net sales for the year $2.46 billion Gross profit margin 13% page 278 Compute the companys cost of goods sold for the year. Approximately how much inventory did PC Connection purchase during the year? What factors might contribute to the companys low gross profit margin? Discuss reasons why PC Connection uses a perpetual inventory system.

Merchandise inventory (beginning of the year)	$79 million
Merchandise inventory (end of the year)	$91 million
Net sales for the year	$2.46 billion
Gross profit margin	13%