Correct way to cost returned items

[jon]

Hi!
I would like to ask what is the correct way to cost returned items under Average costing. Let us say during sales, the item's average cost is USD10, so the GL entry for said item is USD10. After receiving some Purchase orders, the item's average cost is now USD10.50. Once this item is returned, what will be the cost to be used? USD 10 or 10.50?

Thanks in advance.