Business Mathematics: Selling - Inventory

In a mercantile business, inventory is merchandise that is held for resale. As such, it will ordinarily be converted into cash in less than a year and is thus a current asset. In a manufacturing business, there will usually be inventories of raw materials and goods in process in addition to an inventory of finished goods.

The retail method is one approach to costing inventory. This method of periodic inventory costing is used mostly by department stores and is based on the relationship between merchandise available for sale and the retail price of the same merchandise.

Retail inventory is determined by subtracting retail sales from the retail price of goods available for that period.

This retail inventory is changed to cost by means of the ratio of cost to selling price.


Example

Two advantages of this system are:

1.   It provides merchandise figures for interim statements.

2.   It aids in disclosing inventory shortages.

 

Solved Problems:

9.26  Find the estimated inventory cost on April 30 from the following data:

 

Solution


9.27 Estimate the cost of inventory for GAP, Inc. using the following information.

 

Solution


 

9.28  Figure the inventory at retail and at cost on October 31 for Gibson, Inc. using the following information:

Solution


 

9.29  Determine by the retail method the estimated cost of the December 31 inventory.

Solution


9.30  Estimate the cost of inventory of May 31 by the retail method.

 

Solution


9.31  From the following data, determine the inventory cost at March 31 by the retail method:

 

Solution

More Problems:

9.32 Find the markup when
 (a) Cost = $24 and selling price = $51
 (b) Selling price = $22.95 and cost = $10.50
 (c) Cost = $14.79 and selling price = $21.50

9.33 If Jones Bros, sells a microwave oven for $679 and their cost is $226.29, what is the markup?

9.34 Facials Ltd. purchased cold cream for $1.75 a jar. If they sell it for $4.50, what is the markup?

9.35 What is the markup on a ski suit that sells for $159.60 and costs the retailer $79.41?

9.36 GAP, Inc. sells picnic tables for $75 each. They paid $25.79. What is the markup?

9.37 Find (a) percent markup based on cost and (b) percent markup based on retail when
  (1) Retail = $26.90 and cost = $15.60
  (2) Retail = $36.50 and cost = $19.48
  (3) Retail = $150 and cost = $96.45

9.38 If the markup on a pair of shoes is $9.50, and the shoes cost the retailer $15, what is the percent markup on cost?

9.39 Jones Bros, has a markup of $15.50 on a pair of designer jeans that sells for $31.97. Find (a) the cost, (b) the percent markup on cost, and (c) the percent markup on retail.

9.40 If an item costs $1.21 and we sell it for $3.17, what is the (a) markup, (b) percent markup on cost, and (c) percent markup on retail?

9.41 A stereo center buys a tape deck for $27.50 and sells it for $42.49. What is the (a) markup and (b) percent markup based on retail?

9.42 What is the percent markup on cost if the markup on retail is 65%?

9.43 Find the percent markup on cost if the markup on retail is 38%.

9.44 Percent markup on retail is 42%. What is the percent markup on cost?

9.45 Find the percent markup on retail if the markup on cost is 121%.

9.46 The percent markup on cost is 48%. What is the percent markup on retail?

9.47 GAP, Inc. purchased doghouses at $75 each. Their markup based on cost is 35%. What is the selling price?

9.48 Rinkle Electronics purchased videotapes at $10.97 each. The markup based on cost is 53%. Find the selling price.

9.49 Karol’s Kandle Shop buys a candelabrum for $19.59. Her markup is 67% on retail. What is the selling price?

9.50 Curly’s Modern Kitchens purchases a dishwasher for $159.67 and wants a markup of 52% on retail. What must the selling price be?

9.51 Johnson Co. buys card tables for $25 and wants a markup of 48% on retail. Find the selling price.

9.52 Jan’s Boutique sells handbags for $39.87 each. Her markup on cost is 70%. Find her cost.

9.53 Willie’s TV Service sells color television sets for $957.69 each. The markup on cost is 87%. Find the cost.

9.54 GAP, Inc. sells a tea cart for $249. If their markup is 40% on retail, what is their cost?

9.55 A retailer sells a suit for $197.50. If the markup is 52% on retail, what is the cost?

9.56 An automobile sells for $7,595 and carries a markup of 67% on retail. What is the dealer’s cost?

9.57 Given the following information, use the retail method to find the estimated inventory cost on May 31.

9.58 Using the retail method, estimate the cost of inventory for Jones, Ltd. from the following information:

Answers to More Problems:

9.32 (a) $27, (b) $12.45, (c) $6.71
9.33 $452.71
9.34 $2.75
9.35 $80.19
9.36 $49.21
9.37 1(a) 72.44%. (b) 42%; 2(a) 87.37%, (b) 46.63%; 3(a) 55.52%, (b) 35.7%
9.38 63j%
9.39 (a) $16.47, (b) 94.11%, (c) 48.48%
9.40 (a) $1.96, (b) 161.98%, (c) 61.83%
9.41 (a) $14.99, (b) 35.28%
9.42 185.71%
9.43 61.29%
9.44 72.41%
9.45 54.75%
9.46 32.43%
9.47 $101.25
9.48 $16.78
9.49 $59.36
9.50 $332.65
9.51 $48.08
9.52 $23.45
9.53 $512.13
9.54 $149.40
9.55 $94.80
9.56 $2,506.35
9.57 $126,500
9.58 $247,032.50