Explanation

Raw materials consumed represents the actual value of materials that went into production during the period. This differs from materials available because we subtract what remained unused at the end.

The formula is: Opening Raw Materials + Purchases – Closing Raw Materials. From the data: Opening stock (1/1/09) = ₦20,000. Raw materials purchased = ₦18,000. Closing stock (31/12/09) = ₦500.

Calculation: ₦20,000 + ₦18,000 – ₦500 = ₦37,500.

Think of it this way: if you started with ₦20,000 worth of materials, bought ₦18,000 more, but still had ₦500 left at year end, then you must have used ₦37,500 worth during the year. Work-in-progress is tracked separately because it represents partially completed goods, not raw materials.