Question

If there were 80,000 pounds of raw materials on hand on January 1, 150,000 pounds are desired for inventory at January 31, and 450,000 pounds are required for January production, how many pounds of raw materials should be purchased in January?

As of December 31, 2017, Stand Still Industries had $4,000 of raw materials inventory. At the beginning of 2017, there was $4,500 of materials on hand. During the year, the company purchased $400,000 of materials; it paid for only $300,500. How much inventory was requisitioned for use on jobs during 2017?

Worth Company reported the following year-end information: Beginning work in process inventory, $200,000; cost of goods manufactured, $875,000; beginning finished goods inventory, $275,000; ending work in process inventory, $230,000; and ending finished goods inventory, $290,000. Worth Company's cost of goods sold for the year is?

Answer 1

(a)Pounds of raw materials to be purchased = 5,20,000 Pounds

Pounds required for production = Opening raw material + Purchase – Closing raw material

Purchase = Pounds required for production - Opening raw material + Closing raw material

Purchase = 450000 – 80000 + 150000

               = 5,20,000 pounds of raw materials

(b) To calculate the amount of raw materials that was requisitioned or put into work in process = $ 4,00,500

Raw Materials put into Work in Process(Requisitioned) = Beginning Raw Materials Inventory + Purchases - Ending Raw Materials Inventory

= $ 4500 + $ 400000 - $ 4000

= $ 4,00,500

The fact that the company has not yet paid for all the materials they purchased is irrelevant

(c) Worth Company's cost of goods sold = = $ 8,60,000

Cost of goods sold = Cost of goods manufactured + Opening stock of finished goods - Closing stock of finished goods

= $ 875000 + $ 275000 - $ 290000

= $ 8,60,000