A Retail Company Uses the Retail Method of Inventory Valued

question 152

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

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