Selected data concerning the past year's operations of the Beach Corporation are as follows: The cost of direct materials purchased is
A) $397,500.
B) $390,000.
C) $367,500.
D) $405,000.

Question

Selected data concerning the past year's operations of the Beach Corporation are as follows:   The cost of direct materials purchased is
A) $397,500. 
B) $390,000. 
C) $367,500. 
D) $405,000.

Quizplus · Accepted Answer

The direct materials used formula is beginning inventory + purchases - ending inventory. Using the given information, we have:
Beginning inventory of direct materials = $65,000
Direct materials used = $883,500 - $675,000 = $208,500
Ending inventory of direct materials = $73,500
So, direct materials purchased = direct materials used + ending inventory - beginning inventory = $208,500 + $73,500 - $65,000 = $390,000. Therefore, the correct answer is B.

Selected Data Concerning the Past Year's Operations of the Beach