Under the Retail Method, the Amount of Ending Merchandise Inventory

question 108

Multiple Choice

Under the retail method, the amount of ending merchandise inventory is estimated by using the ratio of the:

• A)goods available for sale at retail to the goods available for sale at higher of cost or market.
• B)goods available for sale at cost to the beginning merchandise inventory.
• C)beginning merchandise inventory to the goods available for sale at retail.
• D)goods available for sale at cost to the goods available for sale at retail.

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Definitions:

Activity Base

A measure used for allocating fixed costs to products or services, based on the activities that drive costs, such as machine hours or labor hours.

Number of Computers

The total count of computing devices within a specific environment or organization.

Divisional Income

The earnings generated by distinct business units or divisions within a corporation, used to assess their individual performance.

Service Department Expenses

Costs associated with departments that support the production or operation of a company but do not directly produce goods or services, such as maintenance and human resources.