A Retail Company Uses the Retail Method of Inventory Valued

question 5

Multiple Choice

A retail company uses the retail method of inventory valued at average cost,lower-of-cost-or-market.The following information relates to 2007 (in 000's) : $\begin{array} {|l|l|l| } \hline& \text {Retail }& \text {cost }\\\hline \text { Beginning inventory, January 1, 2007.}&\$120&\$72\\\hline \text {Sales revenue. }&\$352\\\hline \text {Purchases. }&\$312&\$480\\\hline \text {Net markdowns. }&\$128\\\hline \text { Net mark-ups..}&\$40\\\hline\end{array}$
What cost ratio should be used to determine the 2007 ending inventory valuation? Do not round to the nearest intermediate value.

• A)0.485
• B)0.600
• C)0.640
• D)0.721