Use the following information to compute the cost of direct materials used for the current year. Assume the raw materials inventory account is used only for direct materials. (Assume no indirect materials.)
January 1 December 31
Inventories Raw materials inventory $7,600 $9,600
Work in process inventory 14,600 9,000
Finished goods inventory 10,500 5,900
Activity during current year
Materials purchased $123,500
Direct labor 96,000
Factory overhead 40,800
Cost of direct materials= $119,560
Explanation:
Giving the following information:
January 1
Raw materials inventory $6,600
Materials purchased $130,500
December 31
Raw materials inventory $11,600
Cost of direct materials= beginning inventory + purchases - ending inventory
Cost of direct materials= 6600 + 130500 - 11600= $119,560
Cost of direct materials used $121,500
Explanation:
Raw material inventory $7600
Add material purchased $123,500
Raw material available for production $131,100
Less raw material inventory $9,600
Cost of direct materials used $121,500