Canmore Company has the following data pertaining to 2018: $$\begin{array} { l r }
\text { Beginning materials inventory } & \$ 50,000 \
\text { Beginning work-in-process inventory } & 0 \
\text { Beginning finished goods inventory } & 0 \
\text { Materials placed into production } & 125,000 \
\text { Materials purchased on account } & 137,500 \
\text { Direct labor incurred (10,000 hours) } & 62,500 \
\text { Cost of goods completed (Job B B8) } & 25,000
\end{array}$$
Factory overhead rate is 125 percent of direct labor costs.
What is the ending materials inventory balance for Canmore in 2018?
A)$50,000
B)$62,500
C)$12,500
D)$37,500

Question

Canmore Company has the following data pertaining to 2018: $$\begin{array} { l r } 
\text { Beginning materials inventory } & \$ 50,000 \
\text { Beginning work-in-process inventory } & 0 \
\text { Beginning finished goods inventory } & 0 \
\text { Materials placed into production } & 125,000 \
\text { Materials purchased on account } & 137,500 \
\text { Direct labor incurred (10,000 hours) } & 62,500 \
\text { Cost of goods completed (Job B B8) } & 25,000
\end{array}$$
Factory overhead rate is 125 percent of direct labor costs.
What is the ending materials inventory balance for Canmore in 2018?
A)$50,000
B)$62,500
C)$12,500
D)$37,500

Quizplus · Accepted Answer

The ending materials inventory balance is calculated as beginning materials inventory plus materials purchased minus materials placed into production. Beginning inventory is $50,000, materials purchased is $137,500, and materials placed into production is $125,000. So, the ending inventory is $50,000 + $137,500 - $125,000 = $62,500.

Canmore Company Has the Following Data Pertaining to 2018 Factory Overhead Rate Is 125 Percent of Direct Labor Costs