Question

Recording the Purchase and Issue of Raw Materials

Kelly Company’s raw materials inventory transactions for the most recent month are summarized here.

Beginning raw materials	$ 10,000
Purchases of raw materials	100,000
Raw materials issued
Materials requisition 1445	50,000	For Job 101
Materials requisition 1446	40,000	For Job 102
Materials requisition 1447	15,000	Used on multiple jobs

1. How much of the raw materials cost would be added to the Work in Process Inventory account during the period?

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2. How much of the raw materials costs would be added to the Manufacturing Overhead account?

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3. Compute the ending balance in the Raw Materials Inventory account.

Answer 1

Req. 1

Direct materials added to Work in Process =  $50,000 +  $40,000 = $90,000

Req. 2

Indirect materials added to Manufacturing Overhead = $15,000

Req. 3 

Raw Materials Inventory
Beg. Balance   10,000 Purchases 100,000	105,000 Issued to Production
End. Balance     5,000