Under the LIFO retail method, the current period cost-to-retail percentage includes both net markdowns and net markups.

Question

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The LIFO retail method calculates the ending inventory value by applying a cost-to-retail percentage to the ending inventory at retail prices. This cost-to-retail percentage includes both net markdowns (reductions in selling prices) and net markups (increases in selling prices) that occurred during the current period.

Under the LIFO Retail Method, the Current Period Cost-To-Retail Percentage