Dayton Hudson Corporation and Subsidiaries - Page 40

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            subtracted from cost of goods available for sale during that                                 
            period to produce a figure for cost of goods sold.                                           
                  In simplified terms, the process of converting the current                             
            year retail value of ending inventory to cost of ending inventory                            
            involves dividing the current year retail value of ending                                    
            inventory by the current retail price index (which, for retailers                            
            using U.S. Bureau of Labor Statistics (BLS) indexes, is the                                  
            current BLS price index for the particular inventory pool divided                            
            by the BLS price index for the year in which that pool was                                   
            adopted (base year)) to yield a figure for current year retail                               
            value of ending inventory expressed in base year dollars.                                    
            Comparing that result to a similar figure computed as of the end                             
            of the immediately preceding accounting period reveals whether an                            
            increment or decrement in the quantity of goods has occurred as                              
            of the end of the period, as opposed to mere changes in retail                               
            price levels.  If there has been no decrement in the quantity of                             
            goods as of the end of the period, cost of ending inventory is                               
            the sum of the prior year's cost of ending inventory plus the                                
            cost of the quantity of inventory in the current increment (if                               
            any).  The retail value of the increment expressed in base year                              
            dollars is multiplied by the current year's retail price index                               
            and then multiplied by the cost complement8 to arrive at the cost                            

            8     Generally, the cost complement is the weighted average                                 
            relationship between the cost of current year purchases and the                              
                                                                           (continued...)                





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Last modified: May 25, 2011