A jewelry manufacturer anticipates purchasing 1,000 ounces of gold in 90 days. To hedge against increases in the price of gold, it purchases 1,000 ounces of gold futures for delivery in 90 days at $1,400 per ounce, also the current market price. The futures investment qualifies as a cash flow hedge of the forecasted purchase. The company makes a $10,000 margin deposit. In 90 days, the market price of gold is $1,475; the company closes out its futures position and purchases the gold several days later for $1,480 per ounce. A few months later, the company sells jewelry products containing the gold. The company will report cost of goods sold on the sale at:

Select one:

a. $1,400,000

b. $1,405,000

c. $1,475,000

d. $1,480,000