Gammil Company has beginning and ending raw materials inventories of $96,000 and $120,000, respectively. If direct materials used were $390,000, what was the cost of raw materials purchased?
A) $390,000.
B) $420,000.
C) $366,000.
D) $414,000.

Question

Quizplus · Accepted Answer

The cost of raw materials purchased can be calculated using the formula:

Cost of raw materials purchased = Direct materials used + Ending raw materials inventory - Beginning raw materials inventory

Substituting the given values, we get:

Cost of raw materials purchased = $390,000 + $120,000 - $96,000
                               = $414,000

Therefore, the correct answer is D, $414,000.

Gammil Company Has Beginning and Ending Raw Materials Inventories of $96,000