Using the retail inventory method, if the cost to retail ratio is 60% and ending inventory at retail is $45,000, then estimated ending inventory at cost is $27,000.
45,000 × .6 = 27,000

Question

Quizplus · Accepted Answer

This is correct because the retail inventory method involves calculating the estimated cost of ending inventory by multiplying the ending inventory at retail by the cost to retail ratio. In this case, $45,000 x 0.6 (or 60%) equals $27,000. Therefore, the estimated ending inventory at cost is $27,000.

Using the Retail Inventory Method, If the Cost to Retail