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Answers to questions

Example 2: Solution (cont.)
Continuous AVCO basis $ $
Sales (7 units × $10.00) 70.00

Cost of sales:
Opening inventory (5 units × $3.50) 17.50
Purchases (5 units × $4.00) + (5 units × $5.00)
+ (5 units × $5.50) 72.50
––––––
90.00
Less: closing inventory (see part (a) (60.81)
–––––– (29.19)

––––––
Gross profit 40.81
––––––

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