Debbie's Bling Shop Uses the Lower of Average Cost or Market

question 147

Multiple Choice

Debbie's Bling 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 Debbie's contained the following information: $\begin{array}{lll}\underline{\text { Retail }}&\underline{\text {Cost}} \\ \$ 27,500 & \$ 19,000 & \text { Beginning inventory } \\94,000 & 71,500 & \text { Purchases } \\105,000 & & \text { Sales } \\5,167 & & \text { Net markups } \\3,067 & & \text { Net markdowns }\end{array}$
In addition, the accounting records for Debbie's disclosed that freight-in charges were $6,700 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) 76.7%
• D) 76.9%

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Definitions:

Monthly Sales

The total revenue or volume of sales generated by a business within a calendar month.

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The specific amount of money allocated by a company for promoting its products or services through various advertising channels within a specific timeframe.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit.

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A hand tool used for stripping the insulation from electric wires, essential in electrical wiring tasks.