Gammil company has beginning and ending raw materials inventories of $96,000 and $120,000, respectively. If direct materials used were $390,000, what was the cost of raw materials purchased? A. $366,000 B. $414,000 C. $390,000 D. $420,000

The cost of raw materials purchased was B. $414,000

Explanation:

The cost of raw materials purchased is calculated by using following formula:

The cost of raw materials purchased = Ending raw materials inventories + Direct materials used - Beginning raw materials inventories

Gammil company has beginning and ending raw materials inventories of $96,000 and $120,000, respectively. Direct materials used were $390,000.

The cost of raw materials purchased = $120,000 + $390,000 - $96,000 = $414,000