The Finished Goods Inventory account must be considered when calculating the amount of direct materials to be purchased.

Question

Quizplus · Accepted Answer

The Finished Goods Inventory account is related to the products that have already been manufactured and are ready for sale, not directly to the purchase of raw materials. Direct materials to be purchased are calculated based on the production requirements, not on finished goods inventory.

The Finished Goods Inventory Account Must Be Considered When Calculating