Answer (C) is correct . Materials used equals beginning inventory, plus purchases, minus ending inventory. Given that purchases are not known, the calculation is as follows: $37,000 + P – $39,500 =? $257,800 P =? $257,800 + $39,500 – $37,000 P =? $260,300
Answer (A) is incorrect because The amount of $255,300 transposed the ending and beginning inventory amounts.
Answer (B) is incorrect because The amount of $257,800 is the amount of materials used without regard to changes in inventory levels.
Answer (D) is incorrect because The amount of $297,300 fails to consider the beginning inventory.
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