To Produce an Inventory Valuation Which Approximates Lower-Of-Cost or Market

Multiple Choice

To produce an inventory valuation which approximates lower-of-cost or market using the retail inventory method, the computation of the ratio of cost to retail should:

A) ignore both mark-ups and markdowns.
B) include mark-ups but not markdowns.
C) include markdowns but not mark-ups.
D) include mark-ups and markdowns.