A business uses the retail inventory method to estimate the value of the ending inventory.For the month of May,the cost of goods available for sale is $15,625 at cost and $21,550 at retail.The cost ratio is:

Question

Quizplus · Accepted Answer

To calculate the cost ratio, divide the cost of goods available for sale by the retail value of goods available for sale:

Cost Ratio = Cost of goods available for sale / Retail value of goods available for sale

Cost Ratio = $15,625 / $21,550

Cost Ratio = 0.725

The cost ratio is 72.5%, so the answer is A.

A Business Uses the Retail Inventory Method to Estimate the Value