The following information relates to the manufacturing operations of the Abbra Publishing Company for the year:

Beginning Ending
Raw materials inventory $563,000 $626,000

The raw materials used in manufacturing during the year totaled $1,098,000. Raw materials purchased during the year amount to:

a. $955,000.
b. $892,000.
c. $1,565,000.
d. $408,000.
e. $1,081,000.

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Kolawole845 Kolawole845 · Answer 1 · 2020-06-03T02:17:01+02:00

Answer:

Raw material purchased = $1,161,000

Explanation:

Raw material purchase budget is determined by adjusting the raw material usage budget for opening and closing inventory of materials.

Purchase budget = usage budgeted + closing inventory - Opening inventory

Purchase budget = 1,098,000 + 626,000 - 563,000= $1,161,000

Note the closing inventory represents the stock of materials needed to be kept, hence it will increase the purchase budget. So we added.

On the other hand hands, the opening inventory represented what already existed , hence we subtracted it as it will reduce what will be required.

Raw material purchased = $1,161,000