May’s Dress Shop’s inventory at cost on January 1 was $40,000. Its retail value was $60,000. During the year, May purchased additional merchandise at a cost of $195,200 with a retail value of $395,200. The net sales at retail for the year were $349,000.Calculate May’s inventory at cost by the retail method.**Note:** Round the "cost ratio" to the nearest whole percent.### Table for Calculating Inventory at Cost| | **Cost** | **Retail** ||-------------------------------|-----------|------------|| **Beginning inventory** | | || **Purchases** | | || **Cost of goods available for sale** | | || **Less net sales for year** | | || **Ending inventory at retail**| | || **Cost ratio** | | % || **Ending inventory at cost** | | |This table is used to determine the ending inventory value at cost using the retail inventory method. You fill in the values and work through the calculations to find the cost ratio and ending inventory at cost.

Beginning Inventory. 40000$ 60000$ Purchases.…

Answered: Calculate May's inventory at cost by…

Business

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Calculate May's inventory at cost by the retail method. Note: Round the "cost ratio" to the nearest whole percent.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

May’s Dress Shop’s inventory at cost on January 1 was $40,000. Its retail value was $60,000. During the year, May purchased additional merchandise at a cost of $195,200 with a retail value of $395,200. The net sales at retail for the year were $349,000.

Calculate May’s inventory at cost by the retail method.

**Note:** Round the "cost ratio" to the nearest whole percent.

### Table for Calculating Inventory at Cost

| | **Cost** | **Retail** |
|-------------------------------|-----------|------------|
| **Beginning inventory** | | |
| **Purchases** | | |
| **Cost of goods available for sale** | | |
| **Less net sales for year** | | |
| **Ending inventory at retail**| | |
| **Cost ratio** | | % |
| **Ending inventory at cost** | | |

This table is used to determine the ending inventory value at cost using the retail inventory method. You fill in the values and work through the calculations to find the cost ratio and ending inventory at cost.

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