Rosel Company used the retail inventory method to approximate the ending inventory.

The following information is available for the current year:

Cost

Retail

Beginning Inventory

650,000

1,200,000

Purchases

9,000,000

14,700,000

Freight In

200,000

Purchase Returns

300,000

500,000

Purchase Allowances

150,000

Departmental transfer in

200,000

300,000

Net Markups

300,000

Net Markdowns

1,000,000

Sales

9,500,000

Sales Discounts

100,000

Employee Discounts

500,000

Estimated normal shoplifting losses

600,000

Estimated normal shrinkage

400,000

4.1.

What is the estimated cost of ending inventory using the

conservative

approach

?

a.

2,400,000

b.

2,460,000

c.

3,060,000

d.

2,700,000

4.2.

What is the estimated cost of ending inventory using the

average cost approach

?

a.

2,560,000

b.

2,624,000

c.

3,264,000

d.

2,880,000