During the month of March,Cara,Inc.had total manufacturing costs of $130,000 and incurred $40,000 in direct labour costs and $30,000 in overhead costs.The materials inventory on January 1 was $3,000 less than the materials inventory on March 31.What was the cost of materials purchased during the month?
A)$37,000
B)$40,000
C)$63,000
D)$70,000

Question

Quizplus · Accepted Answer

Total manufacturing costs = Direct labor cost + Manufacturing overhead cost + Cost of materials used
$130,000 = $40,000 + $30,000 + Cost of materials used
Cost of materials used = $60,000

Cost of materials purchased = Cost of materials used - Decrease in materials inventory
Cost of materials purchased = $60,000 - $3,000 = $57,000

Therefore, the best choice is (C) $63,000, as it is closest to $57,000.

During the Month of March,Cara,Inc