Bottum Corporation, a manufacturing Corporation, has provided data concerning its operations for May. The beginning balance in the raw materials account was $20,000 and the ending balance was $36,000. Raw materials purchases during the month totaled $63,000. Manufacturing overhead cost incurred during the month was $111,000, of which $2,000 consisted of raw materials classified as indirect materials. The direct materials cost for May was:
A) $63,000
B) $47,000
C) $79,000
D) $45,000

Question

Quizplus · Accepted Answer

Direct materials cost can be calculated by adding the beginning balance of raw materials to the purchases made during the month, then subtracting both the ending balance and the indirect materials (which are part of manufacturing overhead and not direct materials). So, ($20,000 + $63,000 - $36,000 - $2,000) = $45,000.

Bottum Corporation, a Manufacturing Corporation, Has Provided Data Concerning Its