When the average-cost method is applied to a perpetual inventory system,the sale and purchase of goods will change the unit cost of the goods that remain in inventory.

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In a perpetual inventory system, the average-cost method recalculates the unit cost of the goods left in inventory each time a purchase or sale is made based on the total cost of goods available for sale and the total number of units available for sale. This means that the unit cost of the remaining goods will change each time a transaction occurs, which is the fundamental concept of the average-cost method.

When the Average-Cost Method Is Applied to a Perpetual Inventory