Conrad, Inc. recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records.$\begin{array}{lr}
\text { Cost of Goods Sold } & \$ 65,000 \
\text { Work-in-Process Inventory, Beginning } & 10,500 \
\text { Work-in-Process Inventory, Ending } & 9,000 \
\text { Selling and Administrative Expense } & 15,000 \
\text { Finished Goods Inventory, Ending } & 15,000 \
\text { Finished Goods Inventory, Beginning } & ?\
\text { Direct Materials Used } & ? \
\text { Factory Overhead Applied } & 12,000 \
\text { Operating Income } & 14,000 \
\text { Direct Materials Inventory, Beginning } & 11,000 \
\text { Direct Materials Inventory, Ending } & 6,000 \
\text { Cost of Goods Manufactured } & 60,000
\end{array}$Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The CFO of Conrad, Inc. has asked you to recalculate the following accounts and to report to him by the end of the day.
What is the amount of direct materials used?
A)$23,500.
B)$28,500.
C)$31,000.
D)$36,000.

Question

Quizplus · Accepted Answer

Direct materials used can be calculated by adding the beginning direct materials inventory to the purchases made during the period and then subtracting the ending direct materials inventory. Since we don't have the purchases directly, we can infer it from other given data. The formula for direct materials used is:$$ \text{Direct Materials Used} = \text{Beginning Direct Materials Inventory} + \text{Purchases} - \text{Ending Direct Materials Inventory} $$Given:- Beginning Direct Materials Inventory = $11,000- Ending Direct Materials Inventory = $6,000We also know the Cost of Goods Manufactured ($60,000), which is part of the calculation needed to find the purchases. The Cost of Goods Manufactured is calculated as:$$ \text{Cost of Goods Manufactured} = \text{Direct Materials Used} + \text{Direct Labor} + \text{Factory Overhead} + \text{Beginning Work-in-Process Inventory} - \text{Ending Work-in-Process Inventory} $$Given:- Factory Overhead = $12,000- Direct Labor = 1.5 times Factory Overhead = 1.5 * $12,000 = $18,000- Beginning Work-in-Process Inventory = $10,500- Ending Work-in-Process Inventory = $9,000Plugging in the known values:$$ 60,000 = \text{Direct Materials Used} + 18,000 + 12,000 + 10,500 - 9,000 $$Solving for Direct Materials Used:$$ 60,000 = \text{Direct Materials Used} + 31,500 $$$$ \text{Direct Materials Used} = 60,000 - 31,500 = 28,500 $$Therefore, the amount of direct materials used is $28,500.

Conrad, Inc Direct Labor Cost Incurred During the Period Amounted to 1