Final answer:
The student's question is related to inventory valuation with a specified retail price and markup percentage. To find the cost, we can use the formula: Retail Price = Cost + (Cost * Markup Percentage), and rearrange to Cost = Retail Price / (1 + Markup Percentage). This is applied to the opening inventory and season-to-date purchases to determine their respective costs.
Step-by-step explanation:
The question concerns a business concept related to inventory valuation and markup percentages. When an inventory has a stated retail price and a markup percentage, we can calculate the cost of goods sold, the expected profit, or other related financial metrics. In this case, the buyer has an opening inventory valued at $505,000 at retail with a markup of 67%.
To find out the cost based on this markup, we'd use the following formula: Retail Price = Cost + (Cost * Markup Percentage). Rearranging the formula to solve for the cost, we get Cost = Retail Price / (1 + Markup Percentage). Using the provided retail price and markup percentage, we calculate the cost as $505,000 / (1 + 0.67), which equals $302,395.21 for the opening inventory cost.
The spring season-to-date purchases at retail $415,000 would follow the same calculation method to find the cost based on the retail price and markup.