Question

Raw materials inventory was $27,000 at the beginning of the year and $25,000 at the end of the year. During the year, $100,000 in raw materials were purchased, including $28,000 of indirect materials that were put into manufacturing overhead during the period. Calculate the cost of direct materials used during the period. a. $130,000 b. $70,000 c. $74,000 d. $102,000

Answer 1

Answer:

c. $74,000

Explanation:

Raw Material Ending Inventory = Raw Material Beginning Inventory + Purchases - Cost of material for the year

Raw Material Ending Inventory = Raw Material Beginning Inventory + (Total Purchases- Indirect material purchased) - Cost of material for the year

$25,000 = $27,000 + ( $100,000 - $28,000 ) - Cost of material for the year

$25,000 = $27,000 + 72,000 - Cost of material for the year

$25,000 = $99,000 - Cost of material for the year

Cost of material for the year = $99,000 - $25,000

Cost of material for the year = $74,000