Choose the correct inclusions to the cost-to-retail ratio computation under the dollar-value LIFO retail method. Beginning Inventory Net Markdowns

 Choose the correct inclusions to the cost-to-retail ratio computation under the dollar-value LIFO retail method.

Beginning Inventory
Net Markdowns
Yes
Yes
Yes
No
No
Yes
No
No

Answer

Beginning Inventory No

Net Markdowns Yes

 This Answer is Correct
DV LIFO retail uses the FIFO (not LCM) cost-to-retail ratio. Under LIFO, a layer added during a period should reflect only the cost and retail amounts pertaining to that period. Thus, beginning inventory amounts are not used in calculating the ratio. Also, because LIFO may contain inventory layers for several preceding periods, excluding net markdowns is not an effective way to accomplish the LCM valuation objective. Thus, net markdowns are included in the cost to retail computation.