Question

In: Accounting

Using the following information, compute the direct materials used. Raw materials inventory, January 1 $&

Using the following information, compute the direct materials used.

Raw materials inventory, January 1 $ 20,000

Raw materials inventory, December 31 40,000

Work in process, January 1 18,000

Work in process, December 31 12,000

Finished goods, January 1 40,000

Finished goods, December 31 32,000

Raw materials purchases 1,400,000

Direct labor 560,000

Factory utilities 150,000

Indirect labor 50,000

Factory depreciation 400,000

Operating expenses 420,000

a. $1,460,000.

b. $1,420,000.

c. $1,400,000.

d. $1,380,000.

Why it's D ????

Expert Solution

OPTION (d) is correct:i.e Solution=$ 13,80,000

COMPUTATION OF DIRECT MATERIALS USED:

Direct Material Used:

Raw Material Inventory(Jan 1)---------$ 20,000

Add: Purchases of Raw Materials-------$14,00,000

Raw Materials available for use---------$ 14,20,000

Less: Raw Materials Inventory(Dec 31)$ 40,000

Raw Material Used/Direct material used $13,80,000

Alternative method for calculation of Direct Material Used:

Direct Material used=Opening stock of Raw material+ Purchaseof Raw Material-Closing stock of Raw Material

= $ 20,000 +$ 14,00,000-$40,000

=$ 13,80,000

ekkarill92 answered 2 years ago

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