A company has purchased some steel to use in the production of steel railings. If this steel has NOT been put into production, it would be classified as
A)finished goods inventory.
B)factory supplies.
C)work-in-process inventory.
D)direct materials inventory.

Question

Quizplus · Accepted Answer

The steel purchased by the company is a direct material inventory as it is the raw material that will be used in the production of steel railings. If the steel had already been processed in some way but not yet completed, it would be considered work-in-process inventory. Finished goods inventory refers to completed products ready for sale, while factory supplies are the materials used in maintaining the production facility, such as tools or cleaning supplies.

A Company Has Purchased Some Steel to Use in the Production