Question

PlayStat is a company that manufactures toys for toddlers. To begin the production, the manufacturers purchase unprocessed plastic and metals. In the context of manufacturing inventories, the unprocessed plastic and metal used to produce toys are referred to as _____.

Answer 1

The options are given below:

A) raw material inventories

B) component parts inventories

C) average aggregate inventories

D) work-in-process inventories

The correct option is A.

Step-by-step explanation:

Raw materials inventory refers to the total cost of all component parts that are currently in stock and which have not yet been used in finished goods production. In other words raw materials are items, substances, or commodities that are used in the primary production or manufacturing of goods.

The kind of raw materials inventory a company needs will depend on the type of manufacturing that they do.

In the scenario presented above therefore, Playstat uses unprocessed plastic and metals as its raw materials in producing toys.