Final answer:
The cost-to-retail percentage used in the retail method to approximate average cost incorporates markdowns, not markups.
Step-by-step explanation:
The statement is b. False. The cost-to-retail percentage used in the retail method to approximate average cost only incorporates markdowns, not markups. This method is used to calculate the average cost of inventory based on the retail price of the items. It involves dividing the total cost of goods available for sale by the total retail value of those goods.