Chapter 14: 12QS (page 657)

Use the following information to compute the cost of direct materials used for the current year.
January 1
December 31
Inventories
Raw materials inventory
$6,000
$7,500
Work in process inventory
12,000
9,000
Finished goods inventory
8,500
5,500
Activity during current year
Materials purchased
$123,500
Direct labor
94,000
Factory overhead
39,000

Expert verified

The cost of direct materials used equals $122,000.

Step by step solution

Direct materials refer to the main raw material that is used to manufacture the final product.

Particulars	Amount
Raw materials inventory, January 1	$6,000
Materials purchased	123,500
Raw materials available for use	129,500
Less: Raw materials inventory, December 31	(7,500)
Direct materials used	$122,000

Unlock Step-by-Step Solutions & Ace Your Exams!

Over 30 million students worldwide already upgrade their learning with Vaia!

Recommended explanations on Business Studies Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Costs	Variable or fixed		Product or period
Costs	Variable	Fixed	Product	period

1. Plastic for BDs - \)1,500	\(1,500		\)1,500
2. Wages of assembly workers - \(30,000
3. Cost of factory rent - \)6,750
4. System staff salaries - \(15,000
5. Labelling - \)0.25 Per BD
6. Cost of office equipment rent - \(1,050
7. Upper management salaries - \)120,000
8. Annual fixed fees for cleaning service - \(4,250
9. Sales commission - \)0.50 per BD
10. Machinery depreciation, straight-line - $18,000

Advertising expenses	\(28,750	Miscellaneous production costs	\)8,425
Depreciation expenses – office equipment	7,250	Office salaries expense	63,000
Depreciation expenses – selling equipment	8,600	Raw material purchases	925,000
Depreciation expenses – factory equipment	33,550	Rent expenses – office space	22,000
Factory supervision	102,600	Rent expenses – selling space	26,100
Factory supplies used	7,350	Rent expenses – factory building	76,800
Factory utilities	33,000	Maintenance expenses – factory equipment	35,400
Direct labor	675,480	Sales	4,462,500
Indirect labor	56,875	Sales salaries expenses	392,560

	January 1	December 31
Inventories
Raw materials inventory	\(6,000	\)7,500
Work in process inventory	12,000	9,000
Finished goods inventory	8,500	5,500
Activity during current year
Materials purchased		$123,500
Direct labor		94,000
Factory overhead		39,000