Which of the following would cause an increase in the cost ratio as used in the retail inventory method?
A) Fewer employee discounts given
B) Less spoilage
C) Lower freight-in charges
D) Decreased mark-ups

Question

Quizplus · Accepted Answer

Decreased mark-ups would result in a decrease in the cost-to-retail ratio, which is the opposite of what is being asked. A lower cost-to-retail ratio indicates a higher percentage of cost relative to retail prices, resulting in higher inventory costs. A, B, and C would all result in a decrease in the cost-to-retail ratio and a decrease in inventory costs, which is also the opposite of what is being asked.

Which of the Following Would Cause an Increase in the Cost