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

Accounting Jan 18, 2021

Cost-to-retail ratio under the cost method is calculated: A. After markdowns (net) and before markups (net) B. After both markups (net) and markdowns (net) C. After markups (net) and before markdowns (net) D. Before both markups (net) and markdowns (net)

Expert Solution

Answer : (B) after both markups (net) and markdowns (net)

Cost to retail ratio is the ratio of total cost of goods available for sale to the retail value of goods avaialable for sale. Here the value of goods available for sale is identified after making adjustments for both markups and markdowns. Markup is added to the inventory and markdown should be deducted from the inventory. After making adjustments for both markups and markdowns cost to retail ratio is calculated.

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