At May 31, 2020, Smythe Inc.has $4,500 in beginning raw materials, $6,000 of direct labour.If manufacturing overhead was $10,500, total manufacturing costs was $50,500, and total raw material purchases were $36,000, how much is ending amount of raw materials?
A)$36,000
B)$21,000
C)$40,500
D)$6,500

Question

Quizplus · Accepted Answer

The ending amount of raw materials can be calculated by adding the beginning raw materials and the total raw material purchases, then subtracting the total manufacturing costs minus direct labor and manufacturing overhead (since total manufacturing costs include direct materials, direct labor, and manufacturing overhead). So, $4,500 (beginning raw materials) + $36,000 (purchases) - ($50,500 (total manufacturing costs) - $6,000 (direct labor) - $10,500 (manufacturing overhead)) = $6,500.