To calculate the average cost per unit, you divide the total _____ of goods by the total _____ of goods over a specific accounting cycle.

To calculate the average cost per unit, you divide the total _____ of goods by the total _____ of goods over a specific accounting cycle.

• A. Cost; number
• B. Number; cost
• C. Value; quantity
• D. Expense; units

Answer: (A)

The idea is to spread the money you spent across every unit to find out how much one unit costs on average. Cost per unit = total cost of goods ÷ total number of units. The top number must be the monetary cost you incurred for the goods, not their selling value or the expense recognized. The bottom number must be how many units you have, i.e., the quantity. This gives a consistent per‑unit cost you can use to value ending inventory and to calculate cost of goods sold. For example, if you buy 100 units for a total cost of 20,000, the average cost per unit is 200. If you then sell 40 units, COGS would be 8,000 and 60 units would remain in inventory valued at 12,000.

The idea is to spread the money you spent across every unit to find out how much one unit costs on average. Cost per unit = total cost of goods ÷ total number of units. The top number must be the monetary cost you incurred for the goods, not their selling value or the expense recognized. The bottom number must be how many units you have, i.e., the quantity. This gives a consistent per‑unit cost you can use to value ending inventory and to calculate cost of goods sold. For example, if you buy 100 units for a total cost of 20,000, the average cost per unit is 200. If you then sell 40 units, COGS would be 8,000 and 60 units would remain in inventory valued at 12,000.