Question

Marcos Industries uses the retail method of inventory costing. The retail value of the inventory is 478,000. If the ratio of cost to retail price is 60, what is the cost value of the inventory?

1) 286,800
2) 478,000
3) 191,200
4) Cannot be determined from the information given.

Answer 1

The cost value of the inventory using the retail method and given ratio is $286,800.

Step-by-step explanation:

To find the cost value of the inventory using the retail method, we need to multiply the retail value of the inventory by the ratio of cost to retail price. The ratio is given as 60, so the cost value can be calculated as:

Cost value = Retail value * (Cost to retail ratio)

Cost value = $478,000 * (60/100) = $286,800

Therefore, the cost value of the inventory is $286,800. Option 1) 286,800 is correct.