Cost-to-retail ratio under the cost method is calculated A

Correct answer : After both marksup (net) and markdowns (net).

Explanation :

First we need to know below mentioned terminology :

• Markup: The difference between the cost of the item and the original retail price at which the item is selling is known as markup. For example, a retailer purchases an item for $1.00 and sell it for $2.00.

• Markdown: Reducing the price of an item below its original selling price. The same retailer (mentioned in markup example) reduces the price of the item to $1.25, the markdown is 75 cents.Usually marked down prices are above the actual cost, it can be seen as discounted rate.

Calculating Cost to Retail Ratio :

Cost-to-retail ratio is equal to the total cost of goods available for sale divided by the retail value of goods available for sale.

The cost-to-retail ratio method, uses both markups and markdowns to calculate the ratio as in this way we know the changes in actual retail pricing after markups or markdowns.