What is the effect of freight-in on the cost-retail ratio when using the conventional retail method?
A) Increases the cost-retail ratio.
B) No effect on the cost-retail ratio.
C) Depends on the amount of the net markups.
D) Decreases the cost-retail ratio.

Question

Quizplus · Accepted Answer

Freight-in is a cost incurred by the buyer to transport goods from the supplier to the buyer's location. Since freight-in is added to the cost of the goods, it increases the cost component of the cost-retail ratio, thereby increasing the ratio.

What Is the Effect of Freight-In on the Cost-Retail Ratio