Calculate Ending Amount of Raw Materials for Marigold Inc.

How to calculate the ending amount of raw materials for Marigold Inc. on May 31, 2020?

Given that Marigold Inc. has $4,900 in beginning raw materials, $5,500 of direct labor, manufacturing overhead of $10,800, total manufacturing costs of $50,000, and total raw material purchases of $35,600,

what is the ending amount of raw materials?

Answer

The ending amount of raw materials for Marigold Inc. on May 31, 2020, is calculated by adding the beginning raw materials and purchases, then subtracting the total manufacturing costs minus direct labor and manufacturing overhead. The correct answer is $6,800.

To calculate the ending amount of raw materials for Marigold Inc. at May 31, 2020, we need to consider the total raw material available and subtract the total manufacturing costs excluding labor and manufacturing overhead. The formula to calculate the ending raw materials inventory is:

Let's plug in the numbers:

Ending Raw Materials = $4,900 (Beginning Raw Materials) + $35,600 (Purchases) - ($50,000 (Total Manufacturing Costs) - $5,500 (Direct Labor) - $10,800 (Manufacturing Overhead))

Ending Raw Materials = $4,900 + $35,600 - ($50,000 - $5,500 - $10,800)

Ending Raw Materials = $4,900 + $35,600 - $33,700

Ending Raw Materials = $6,800

Thus, the correct answer is d. $6,800.