Question

Emarson & Slater Inc. had materials inventory of $13,200 on July 1. The materials inventory on July 31 was $16,500, and the cost of direct materials used in production during the month was $22,000. What was the cost of materials purchased during the month?a. $25,300 b. $17,000 c. $35,000 d. $20,000

Answer 1

a. $ 25,300

Step-by-step explanation:

The amount of purchases can be determined by taking the cost of direct materials used in production as adjusted by the inventory movement

so the total purchases is:

Purchases = Closing Inventory + Material used - Opening inventory

$ 16,500 + $ 22,000 - $ 13,200 = $ 25,300

This can also be explained by the change in inventory values i.e $ 3,300 plus the materials used in production $ 22,000