Suppose a bakery reports this information: beginning raw materials inventory $4,000 ending raw materials inventory 3,000 beginning work-in-process inventory 3,000 ending work-in-process inventory 2,000 beginning finished goods inventory 2,000 ending finished goods inventory 4,000 direct labor 29,000 purchases of raw materials 99,000 manufacturing overhead 21,000 what is the cost of direct materials used?

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Business

Katie

18 July, 16:19

Suppose a bakery reports this information: beginning raw materials inventory $4,000 ending raw materials inventory 3,000 beginning work-in-process inventory 3,000 ending work-in-process inventory 2,000 beginning finished goods inventory 2,000 ending finished goods inventory 4,000 direct labor 29,000 purchases of raw materials 99,000 manufacturing overhead 21,000 what is the cost of direct materials used?

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Vaughan · Answer 1

To calculate cost of direct materials used, you take Purchases of raw materials and subtract the change in raw materials. The idea is that the cost of raw materials used will be however much raw materials decreased during the period plus the purchase of raw materials. Beginning raw materials is 4000, and ending raw materials is 3000, a change of - 1000. Purchases of raw materials were 99,000. The Cost of Direct Materials is 99,000 - (-1000) = 100,000.