Question

An advantage of using the retail method of inventory costing is

a.that it provides inventory figures for preparing monthly and quarterly financial statements when the periodic system is used.
b.that it allows management to monitor operations more closely when the number of physical inventories is reduced.
c.that it may be used as an aid in taking a physical inventory.
d.All of these choices are correct.

Answer 1

An advantage of using the retail method of inventory costing is

c.that it may be used as an aid in taking a physical inventory.

Step-by-step explanation:

The retail inventory method is used by retailers that resell merchandise to estimate their ending inventory balances. This method is based on the relationship between the cost of merchandise and its retail price. The method is not entirely accurate, and so should be periodically supplemented by a physical inventory count. Its results are not adequate for the year-end financial statements, for which a high level of inventory record accuracy is needed.