Question

What does the raw materials inventory consist of?

1) The cost of units that
2) The quantity of units that
3) The weight of units that
4) The size of units that

Answer 1

Raw materials inventory is the cost of unprocessed units held by a company that are used in producing finished goods, appearing as current assets on the balance sheet, vital for efficient production and sales.

Step-by-step explanation:

Raw materials inventory typically consists of the cost of units that are used in the production of the company's finished goods. These materials are unaugmented by labor or overhead costs, meaning they have not been processed into final products.

The inventory is accounted for in the balance sheet of a company, under the current assets section. The inventory represents the raw materials on hand at any given time, and it is crucial for a business to manage this inventory efficiently to avoid overstocking or stockouts, which can affect production and sales.