Answer:
Sunland Co.
The calculation of the cost ratio should be based on cost and retail of $1,581,000 and $2,288,500 respectively.
Explanation:
a) Data and Calculations:
                                                  Cost            Retail      Cost to Retail Ratio 
Beginning inventory           $ 318,000      $494,000 
Purchases                           1,240,000      1,720,000 
Freight-in                                23,000             — 
Employee discounts                     —               8,500 
Net markups                                 —             66,000
Goods available for sale $1,581,000    $2,288,500      69.08%
Less:
Net markdowns                           —              86,000 
Sales revenue                              —         1,620,000
Estimated ending Inventory at retail      $582,500
Estimated ending Inventory
 at cost                              $402,391 ($582,500 * 69.08%)
Calculation of the cost ratio = $1,581,000/$2,288,500 * 100 = 69.08%