Question

Conrad, Inc. recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records.

Cost of Goods Sold	$	69,000
Work-in-Process Inventory, Beginning		12,100
Work-in-Process Inventory, Ending		9,800
Selling and Administrative Expense		17,000
Finished Goods Inventory, Ending		17,200
Finished Goods Inventory, Beginning		?
Direct Materials Used		?
Factory Overhead Applied		12,800
Operating Income		14,440
Direct Materials Inventory, Beginning		11,360
Direct Materials Inventory, Ending		6,280
Cost of Goods Manufactured		63,760

Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The CFO of Conrad, Inc. has asked you to recalculate the following accounts and to report to him by the end of the day.

What is the amount of direct materials purchased?

Answer 1

Fixed overhead applied = $12,800

Diret labor = 1.5 x Fixed overhead

= 1.5 x 12,800

= $19,200

Cost of goods manufactured = Direct material used + Direct labor + Fixed overhead applied + Work-in-Process Inventory, Beginning - Work-in-Process Inventory, Ending

63,760 = Direct material used + 19,200 + 12,800 + 12,100 - 9,800

Direct material used = 63,760 - 19,200 - 12,800 - 12,100 + 9,800

= $29,460

Direct material used = Direct material, beginning + Direct material purchased - Direct material, ending

29,460 = 11,360 + Direct material purchased - 6,280

Direct material purchased = 29,460 - 11,360 + 6,280

= $24,380

the amount of direct materials purchased = $24,380