Below is information from Moving Car, Inc. for the current period:

Raw materials inventory, beginning balance

$201,300

Raw materials inventory, ending balance

$213,700

Raw materials purchased during the period: $858,900

What is the amount of raw materials the firm used during the period?

Question

Below is information from Moving Car, Inc. for the current period:

Raw materials inventory, beginning balance

$201,300

Raw materials inventory, ending balance

$213,700

Raw materials purchased during the period:  $858,900

What is the amount of raw materials the firm used during the period?

BlackTom AI · Accepted Answer

Consider the task: determine how much raw materials the firm used during the period using the formula: Beginning Raw Materials + Purchases − Ending Raw Materials.
Option 1: $657,600. This would imply either a smaller purchases amount or a larger ending balance than given. If you subtract the ending balance ($213,700) from the sum of beginning inventory and purchases, you don’t land on this figure, so this value is not consistent with the provided data.
Option 2: $858,900. Notably, this equals the total purchases during the period alone, ignoring the beginning and ending inventories. Since usage must account for both starting stock and additional purchases minus what remains, simply taking purchases misses the inventory flows and is therefore incorrect.
Option 3: $846,500. This value comes from the correct application of the inventory flow equation: Beginning ($201,300) + Purchases ($858,900) = $1,060,200; subtract Ending ($213,700) gives $846,500. It properly incorporates all three components: beginning balance, additions via purchases, and the ending balance.
Option 4: $871,300. This would suggest a different relationship between beginning, purchases, and ending inventories than what is provided. If you test it against the formula, it would require either a different beginning or ending amount to hold, so it does not fit the given data.
Option 5: $1,072,600. This extreme value would imply a much larger adjustment from beginning to ending inventories than the data support. It cannot be reconciled with Beginning ($201,300), Purchases ($858,900), and Ending ($213,700) under the standard calculation, so it’s not plausible here.
To connect the dots, recognize that the only option that satisfies Beginning + Purchases − Ending = Usage is the one that correctly combines all three numbers in the exact balance shown, yielding the calculated usage of $846,500. The other figures either ignore a component or rely on an inconsistent interpretation of the flow of raw materials.

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