CSLB Law & Business ExamBusiness FinancesMedium
A contractor's records show beginning materials inventory of $12,000, materials purchased during the month of $38,000, and ending materials inventory of $9,000. What is the cost of materials used for the month?
- A$35,000
- B$41,000
- C$50,000
- D$29,000
Show answer & explanationAnswer & explanation
Correct answer: B. $41,000
Cost of materials used = Beginning Inventory + Purchases − Ending Inventory = $12,000 + $38,000 − $9,000 = $41,000. This figure represents the actual material cost consumed on jobs during the month.
Why the other options are wrong
- A. Does not correctly apply the beginning/ending inventory adjustment.
- C. Ignores the ending inventory deduction entirely.
- D. Incorrectly subtracts purchases instead of adding.
Cost of Goods/Materials Used
The total cost of materials consumed during a period, calculated by adjusting purchases for changes in inventory.
- Formula: Beginning Inventory + Purchases − Ending Inventory
- Reflects actual material cost, not just purchases
- Used to calculate accurate job costing and gross profit
Memory trick: Start with what you had, add what you bought, subtract what's left.