The inventory section calculates the cost for the items you sold this year.
Per your example:
Line 35: Beginning Inventory (carried over from last year): $40
Line 36: Plus: Purchases, Materials, and Supplies: $1,100
Line 41: Less: Ending Inventory: $300
Line 42: Cost of Goods Sold: $840
Shipping/packaging costs are generally reported separately from the inventory calculation, either Line 22 Supplies or Line 27a Other Expenses.
For more info, see IRS on Inventory: How To Figure Cost of Goods Sold
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