Figure 2-5.In July, Econo Company purchased materials costing $21,000 and incurred direct labor cost of $18,000. Overhead totaled $32,000 for the month. Information on inventories was as follows:
$\begin{array}{lcc}&\text { July } 1&\text { July } 31\
\text { Materials } & \$ 6,200 & \$ 7,100 \
\text { Work in process } & \$ 700 & \$ 1,200 \
\text { Finished goods } & \$ 3,300 & \$ 2,700
\end{array}$
-Refer to Figure 2-5. What was the cost of direct materials used in July?

Question

Figure 2-5.In July, Econo Company purchased materials costing $21,000 and incurred direct labor cost of $18,000. Overhead totaled $32,000 for the month. Information on inventories was as follows:
 $\begin{array}{lcc}&\text { July } 1&\text { July } 31\
\text { Materials } & \$ 6,200 & \$ 7,100 \
\text { Work in process } & \$ 700 & \$ 1,200 \
\text { Finished goods } & \$ 3,300 & \$ 2,700
\end{array}$
-Refer to Figure 2-5. What was the cost of direct materials used in July?

Quizplus · Accepted Answer

The cost of direct materials used is calculated by adding the beginning materials inventory to the materials purchased and then subtracting the ending materials inventory: $ \$6,200 + \$21,000 - \$7,100 = \$20,100 $.

Figure 2-5 -Refer to Figure 2-5