What is the cost of raw materials used if Raw Materials Purchases is $800,000, beginning Raw Materials Inventory is $100,000, and ending Raw Materials inventory is $150,000?

What is the cost of raw materials used if Raw Materials Purchases is $800,000, beginning Raw Materials Inventory is $100,000, and ending Raw Materials inventory is $150,000?

• A. $750,000
• B. $650,000
• C. $950,000
• D. $850,000

Answer: (A)

To determine the cost of raw materials used, you need to consider both the purchases made during the period and the changes in inventory levels. The formula to calculate the cost of raw materials used is: Cost of Raw Materials Used = Raw Materials Purchases + Beginning Raw Materials Inventory - Ending Raw Materials Inventory. In this case: - Raw Materials Purchases = $800,000 - Beginning Raw Materials Inventory = $100,000 - Ending Raw Materials Inventory = $150,000 Now, let's plug these values into the formula: Cost of Raw Materials Used = $800,000 + $100,000 - $150,000. Calculating this gives: = $800,000 + $100,000 = $900,000. Then subtracting the ending inventory, we find: = $900,000 - $150,000 = $750,000. Thus, the cost of raw materials used is $750,000, confirming that this is the correct calculation leading to the answer of $750,000. This method effectively takes into account how much material was available at the start, what was bought during the period, and what is left at the end, providing a clear picture of actual usage.

To determine the cost of raw materials used, you need to consider both the purchases made during the period and the changes in inventory levels. The formula to calculate the cost of raw materials used is:

Cost of Raw Materials Used = Raw Materials Purchases + Beginning Raw Materials Inventory - Ending Raw Materials Inventory.

In this case:

• Raw Materials Purchases = $800,000

• Beginning Raw Materials Inventory = $100,000

• Ending Raw Materials Inventory = $150,000

Now, let's plug these values into the formula:

Cost of Raw Materials Used = $800,000 + $100,000 - $150,000.

Calculating this gives:

= $800,000 + $100,000 = $900,000.

Then subtracting the ending inventory, we find:

= $900,000 - $150,000 = $750,000.

Thus, the cost of raw materials used is $750,000, confirming that this is the correct calculation leading to the answer of $750,000.

This method effectively takes into account how much material was available at the start, what was bought during the period, and what is left at the end, providing a clear picture of actual usage.