Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 30

If the December 1 balance in the Direct Materials (DM) Inventory account was $37,000, the December 31 balance was $39,500, and $150,000 of DM were issued to production during December, what was the amount of DM purchased during the month?

Step 1 of 2

1.

In the present scenario the calculation breakdown for the raw material purchase is shown below:

a) It takes into account the budgeted production units at the first place.

b) It then adds the entire closing raw material inventory in the process.

c) It deducts the entire opening raw material inventory at the end to arrive at the raw materials that must be purchased for the period.

Deriving the excel cells are shown below: