Reference no: EM133085866

Question - Addeo Retail Outlets, Inc., uses the dollar-value LIFO retail inventory method for inventory costing. Addeo Retail Outlets, Inc., has beginning inventory with a cost of $10,000 and a retail value of $40,000.  During the year, the company purchases goods with a cost basis of $80,000 and a retail basis of $100,000. It has net markups of $10,000 and net markdowns of $5,000. Sales are $50,000 at retail.

The price index for the current year is 1.04.  Addeo Retail Outlets, Inc., adopted the dollar-value LIFO method at the end of the prior year, which is the base year with a price index of 1.00.

Required -

a. What is the cost of the ending inventory using the dollar-value LIFO retail inventory method?

b. Compute the cost to retail ratio under the conventional (LCM) retail method.