If the Net Markdowns Are Excluded from the Calculation of the Cost-To-Retail

question 58

Multiple Choice

If the net markdowns are excluded from the calculation of the cost-to-retail ratio in the retail inventory method, what is the effect on the cost-to-retail ratio?

• A) The denominator of the ratio will be lower, which results in a higher cost-to-retail ratio.
• B) The denominator of the ratio will be higher, which results in a lower cost-to-retail ratio.
• C) The numerator of the ratio will be higher, which results in a higher cost-to-retail ratio.
• D) The numerator of the ratio will be lower, which results in a lower cost-to-retail ratio.

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Definitions:

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