Midwest Office Products Uses the Retail Method to Estimate Ending

question 62

Multiple Choice

Midwest Office Products uses the retail method to estimate ending inventory in its monthly financial statements. The following information is available for the month ended 31 May:
$\begin{array} { | l | l | l | } \hline & \text { Cost } & \text { Retail } \\\hline \text { Sales } & & \$ 300,000 \\\hline \text { Inventory, 1 May } & \$ 137,400 & \$ 198,000 \\\hline \text { Net purchases } & \$ 184,800 & \$ 273,000 \\\hline \text { Goods available for sale } & \$ 322,200 & \$ 471,000 \\\hline\end{array}$
-Determine the cost ratio that should be used in estimating the 31 May inventory using the retail method.

• A) 63.8%.
• B) 69.4%
• C) 66.0%.
• D) 68.4%.

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Definitions:

Unfair Labor Practices

Actions by employers or unions that violate the rights of employees as defined by labor laws or labor agreements.

Compulsory Arbitration

A form of arbitration where parties are forced to resolve disputes through an arbitrator or arbitration panel rather than the courts.

Inflationary Increases

The rise in the price level of goods and services over a period, eroding purchasing power and value of money.

Collective Bargaining

The negotiation process between employers and a group of employees aimed at reaching agreements to regulate working conditions.