Under the retail inventory method,if the cost-to-retail ratio is 60% and ending inventory at retail is $105,000,then estimated ending inventory is $63,000.

Question

Quizplus · Accepted Answer

The retail inventory method calculates the value of inventory by multiplying the retail value of goods by a cost-to-retail percentage.

Thus, if the cost-to-retail ratio is 60% and ending inventory at retail is $105,000, we can calculate the estimated ending inventory as:

Estimated Ending Inventory = Ending Inventory at Retail x Cost-to-Retail Ratio
= $105,000 x 0.6
= $63,000

Therefore, the answer is A) True.

Under the Retail Inventory Method,if the Cost-To-Retail Ratio Is 60