Direct materials are 30% of the year's manufacturing costs incurred. The beginning work-in-process is 125% of the ending work-in-process. Labour and overhead costs total $56,000 and the cost of goods manufactured is $90,000.
Direct materials cost is:

Question

Quizplus · Accepted Answer

Direct materials are 30% of the year's manufacturing costs. The total manufacturing costs can be found by adding labor and overhead costs to the direct materials cost. Given that labor and overhead costs total $56,000, and direct materials are 30% of the total manufacturing costs, we can set up the equation: Direct Materials = 0.30 * (Direct Materials + $56,000). However, this approach is incorrect without knowing the total manufacturing costs directly. The correct approach is to understand that the cost of goods manufactured ($90,000) includes direct materials, labor, and overhead. Since direct materials are 30% of the manufacturing costs, we calculate 30% of $90,000, which is $27,000. My explanation contained an error in the calculation process, leading to the wrong initial conclusion. The correct answer, based on the correct calculation from the cost of goods manufactured, should indeed be C) $27,000, not A) $24,000.

Direct Materials Are 30% of the Year's Manufacturing Costs Incurred