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 * .60 = $27,000

Question

Quizplus · Accepted Answer

This is correct according to the calculation provided. Since the cost to retail ratio is 60%, multiplying the ending inventory at retail ($45,000) by 0.6 gives an estimated ending inventory at cost of $27,000.

Using the Retail Inventory Method, If the Cost to Retail