During the month of March 2005, Nale Co. used $300,000 of direct materials. On March 31, 2005, Nale's direct materials inventory was $50,000 more than it was on March 1, 2005.

During the month of March 2005, Nale Co. used $300,000 of direct materials. On March 31, 2005, Nale's direct materials inventory was $50,000 more than it was on March 1, 2005.

Direct material purchases during the month of March 2005 amounted to

$0.
$250,000.
$300,000.
$350,000.

 
 You Answered Correctly!
Purchases is the amount required to provide the materials used ($300,000) and the increase in inventory ($50,000) for total purchases of $350,000.

Beginning material inventory + purchases = ending material inventory + material used

Purchases = ending inventory - beginning inventory + material used

Purchases = inventory increase + materials used

Purchases = $50,000 + $300,000

Purchases = $350,000