In the Retail Inventory Method, the Cost to Retail Ratio

question 139

True/False

In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the good sold.

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Definitions:

Direct Labor Hour

A unit of measure for the amount of time a worker spends on a specific task or project.

Factory Overhead

all indirect costs associated with the manufacturing process, excluding direct labor and direct materials.

Machine Hours

A measure of production time or activity based on the number of hours machines are used in the manufacturing process.

Overapplied Overhead

A situation where the actual manufacturing overhead costs are less than the overhead costs applied to production, resulting in a variance.