Question

Canmore Company has the following data pertaining to 2014:

Beginning materials inventory - $50,000
Beginning WIP inventory - $0
Beginning finished goods inventory - $0
Materials placed into production - $125,000
Materials purchased on account - $137,500
Direct labor incurred (10,000 hours) - $62,500
Cost of goods completed (Job BB8)

Factory overhead rate is 125% of direct labor costs
What is the ending materials inventory balance for Canmore in 2014?

a. $37,500
b. $12,500
c. $50,000
d. $62,500

Answer 1

The ending materials inventory balance for Canmore in 2014 is $62,500.

Step-by-step explanation:

The ending materials inventory balance for Canmore in 2014 can be calculated using the following formula:

Ending materials inventory = Beginning materials inventory + Materials purchased - Materials placed into production

Plugging in the values given:

Ending materials inventory = $50,000 + $137,500 - $125,000 = $62,500

Therefore, the ending materials inventory balance for Canmore in 2014 is $62,500.