Baycrest Corporation, a manufacturing company, has provided the following data for the month of June:

Baycrest Corporation's data

Inventories

Beginning

Ending

Raw materials

$42,000

$29,500

Finished goods

$61,000

$34,000

Raw materials purchased during June totaled $81,300, and the cost of goods manufactured totaled $154,600.

What was the cost of raw materials used in production during June?

Question

Baycrest Corporation, a manufacturing company, has provided the following data for the month of June:

Baycrest Corporation's data

Inventories

Beginning

Ending

Raw materials

$42,000

$29,500

Finished goods

$61,000

$34,000

Raw materials purchased during June totaled $81,300, and the cost of goods manufactured totaled $154,600.

What was the cost of raw materials used in production during June?

BlackTom AI · Accepted Answer

Raw materials used = Beginning raw materials + Purchases of raw materials − Ending raw materials.

1. Relevant knowledge points and concepts
- The raw materials used in production (direct materials consumed) are computed by adjusting beginning raw materials inventory for purchases during the period and for the ending raw materials inventory. This is distinct from cost of goods manufactured, which includes raw materials used plus direct labor and manufacturing overhead.

2. Step-by-step reasoning
- Start with the beginning raw materials inventory.
- Add raw materials purchased during the period to get total raw materials available for use.
- Subtract the ending raw materials inventory to determine the amount actually used in production.

3. Calculations with intermediate steps
- Beginning raw materials = $42,000
- Raw materials purchased = $81,300
- Raw materials available for use = $42,000 + $81,300 = $123,300
- Ending raw materials = $29,500
- Raw materials used in production = $123,300 − $29,500 = $93,800

4. Why the correct answer is correct
- The formula directly measures consumption: the company had $123,300 worth of raw materials available, but $29,500 remained unused at month-end, so $93,800 was consumed in production. This aligns with standard cost-accounting practice for calculating direct materials used.

5. Why the other options are incorrect
- $124,100: No data or reasonable combination of given figures yields this value; it appears to be an arithmetic or misreading error.
- $81,300: This is raw materials purchased, not materials used. It ignores the change in raw materials inventory.
- $111,500: This number does not match any proper combination of beginning inventory, purchases, and ending inventory from the data; likely an erroneous subtraction or addition.

6. Conclusion
The computed cost of raw materials used in production during June is $93,800, which matches the provided correct answer.

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