Question

A company began the year with $500 in raw materials and purchased $10,250 more during the year. If the company has $725 in raw materials at the end of the year, then they would report direct materials used of

Answer 1

Answer:

$10,025

Explanation:

The change in raw material account balance at the start of a period and at the end of the period is as a result of 2 factor namely; use and purchases.

While use will result in a decrease in the account balance, purchases will cause an increase. This may be expressed mathematically as

Opening balance + purchases - use = closing balance

$500 + $10,250 - G = $725

where G represents the cost of the materials used during the period

G = $500 + $10,250 - $725

= $10,025