Darla's Dazzle Shop Uses the Lower of Average Cost or Market

question 63

Multiple Choice

Darla's Dazzle Shop uses the lower of average cost or market retail inventory method to determine its ending inventory.The accounting records for the current year for Darla's contained the following information: $\begin{array}{lll}&\text { Cost }&\text { Retail }\\\text { Beginning inventory } & \$ 19,000 & \$ 27,500 \\\text { Purchases } & 71,500 & 94,000 \\\text { Sales } & & 105,000 \\\text { Net markups } & & 5,167 \\\text { Net markclowns } & & 3,067\end{array}$ In addition, the accounting records for Darla's disclosed that freight-in charges were $4, 500 and sales returns were $2, 833.What is the cost-to-retail percentage to be used for ending inventory calculations?

• A)71.4%
• B)73.2%
• C)75.0%
• D)76.9%

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