Question

Requirement 1. Calculate direct materials​ inventory, total​ cost, December​ 31, 2014. Determine the​ formula, then calculate ending direct materials total cost. x = Ending direct materials total cost x =

Answer 1

Solution:

If 2 pounds of direct materials are used to make one unit of finished product, then 115,000 units × 2 lbs, or 230,000 lbs were used at $0.65 per lb of direct materials i.e. ($149,500 ÷ 230,000 lbs.).

The Formula for calculating Ending Direct Material Cost =

[Ending Direct Material Inventory * Cost per lb]

Therefore, Ending Direct Materials cost is 1,900 lbs. * $0.65 = $1,235.