How to Calculate the Beginning Inventory for Raw Materials

Raw materials are items, such as lumber, that a manufacturer uses to make finished products that are sold to customers. Raw materials inventory is the amount of raw materials you hold that you have not yet used in your manufacturing process. Beginning raw materials inventory is the amount you have at the beginning of an accounting period. Buying additional raw materials adds to your raw materials inventory. Using raw materials to manufacture products decreases raw materials inventory. You can calculate your beginning raw materials inventory using information from your accounting records.

Determine from your records the amount of raw materials you used during an accounting period to manufacture products. For example, assume you used $20,000 in raw materials.

Determine your raw materials inventory at the end of the accounting period. In this example, assume you had $10,000 in ending raw materials.

Add together the raw materials you used during the period and the ending raw materials inventory to determine your total raw materials available during the period. In this example, add $20,000 in raw materials used and $10,000 in ending raw materials to get $30,000 in total raw materials available.

Determine the cost of raw materials that you purchased during the period. In this example, assume you purchased $17,000 in raw materials during the period.

Subtract the cost of raw materials purchased from total raw materials available to calculate the beginning raw materials inventory. Continuing with the example, subtract $17,000 in raw materials purchased from $30,000 in total raw materials available to get $13,000 in beginning raw materials inventory. This means you started the accounting period with $13,000 in raw materials inventory before buying any additional raw materials or using any raw materials in your manufacturing process.

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