Answer: a. $1,380
Explanation:
Using average cost method, the price of all inventory is the same and this cost is calculated by dividing the total cost of the inventory by the total units.
= (5 * 61) + (15 * 63) + (10 * 74) + (10 * 77)
= 305 + 945 + 740 + 770
= $2,760
Average cost = 2,760/ (5 + 15 + 10 + 10)
= $69 per unit
Total units for the year = 5 + 15 + 10 + 10 = 40 units
Total units on hand = 20 units
Total sold = 40 - 20 units
Cost of goods sold = 20 * 69
= $1,380
