Problem 8.7A

# Problem 8.7A - shrinkages does still exist. The perecet of...

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Retail Method Goods Available For Cost 462,000 Goods Available For Sale at Retail 840,000 Cost Ratio (Cost divided by Retail) 55% Physical Count of Goods 744,000 Estimated Ending Inventory (Cost Ratio times Physical Count) 52,800

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1. 84,480 x 55%=46,464 2. 52,800 - 46464 3. 744,000 x 55% - 6336
Ending Inventory 84,480 Estimated Shrinkage Loss= 6336 Gross Profit = 402,864

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Althought the amount of shrinkage is not high comparted to the volume of sales Betweent the Ears had, the
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Unformatted text preview: shrinkages does still exist. The perecet of shrinkage is less than 2% which most retail company's would be fine with. However if Between the ears wanted to lower that number below one percent than they could do an inventory more than just once a year to better track their inventory. If quaterly inventories were not cost effective than they might consider doing them semi annual, or twice a year to help lower shrinkage to inventory....
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## This note was uploaded on 12/18/2010 for the course BME 254788 taught by Professor Mitchell during the Spring '10 term at SUNY Albany.

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Problem 8.7A - shrinkages does still exist. The perecet of...

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