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Under the periodic average cost method, 30 units are available at a total cost of $150 and 19 units are sold. What is the cost of merchandise sold?
A$55
B$85
C$95
D$105
Answer & Solution
Correct answer: C. $95
1. Average cost per unit = total cost / units available = $\$150 / 30 = \$5$.
2. Cost of merchandise sold = units sold $\times$ average cost = $19 \times \$5$.
3. Cost of merchandise sold = $\$95$.
4. Rule out $\$55$: that is the periodic average ending inventory (11 units $\times \$5$).
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.1.2 "Periodic Inventory System", p.121_
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