Garrison Company uses the retail method of inventory costing. They started the year with an inventory that had a retail cost of $45,000. During the year they purchased an inventory with a retail cost of $300,000. After performing a physical inventory, they calculated their inventory cost at retail to be $80,000. The mark up is 100% of cost. Determine the ending inventory at its estimated cost.
A) $160,000
B) $80,000
C) $40,000
D) $45,000

Question

Quizplus · Accepted Answer

The cost-to-retail ratio is 50% because the markup is 100% of cost. The ending inventory at retail is $80,000, so the estimated cost is $80,000 * 50% = $40,000.

Garrison Company Uses the Retail Method of Inventory Costing