The home decoration retailer Maison Tilleul measures its inventories using the retail method. Its management accountant proposes applying a single margin rate to the whole inventory; however, the household linen department earns a gross margin of 45 % and the tableware department a margin of 20 %, these rates taking markdowns into account. Year-end inventory represents 150,000 of sales value for linen and 90,000 for tableware. Determine the cost of each department's inventory, then the total cost, applying to each its own percentage.
- Household linen: inventory at selling prices
- 150,000
- Household linen: gross margin
- 45 %
- Tableware: inventory at selling prices
- 90,000
- Tableware: gross margin
- 20 %