A Level Accounting (9706)•9706/12/M/J/18
Explanation
AVCO Inventory Valuation Steps:
- Initial inventory: 100 units × 2,400 total value.
- Add purchase: 40 units × 1,000; new total 140 units at $3,400.
- Calculate average cost: 24.2857 per unit.
- Value sold: 80 units × 194.
Why A is correct:
- AVCO assigns cost of goods sold based on weighted average unit cost after all purchases up to the sale date.
Why the others are wrong:
- B. 24.50 before multiplying.
- C. 25, ignoring initial inventory.
Final answer: A
Topic: Preparation of financial statements
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