Data for a firm using the Average LCM (conventional retail inventory method) retail inventory method is as follows:

 Data for a firm using the Average LCM (conventional retail inventory method) retail inventory method is as follows:

Cost    Retail
Beginning inventory    $ 300    $ 467
Net purchases    1,200    2,000
Net additional markups        100
Net markdowns        (300)
Sales        $1,700
Compute cost of goods sold.

$1,169
$1,160
$1,177
$1,122

Answer

$1,169

 You Answered Correctly!
Ending inventory at retail = $567 (= $467 + $2,000 + $100-$300-$1,700). The cost-to-retail ratio includes both the beginning inventory amounts, purchases and net markups. C/R = $300 + $1,200/($467 + $2,000 + $100) = .5843. Ending inventory at cost = $567(.5843) = $331. Cost of goods sold = $300 + $1,200 - $331 = $1,169.