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 manufacturing overhead costs. The materials inventory on March 1 was $3,000 less than the materials inventory on March 31. What was the cost of materials purchased during the month?

Question

Quizplus · Accepted Answer

To calculate the cost of materials purchased during the month, we need to use the following formula:

Cost of materials purchased = Materials inventory on March 1 - Materials inventory on March 31 + Direct materials used

We know that the materials inventory on March 1 was $3,000 less than the inventory on March 31. Therefore, we can write:

Materials inventory on March 1 = Materials inventory on March 31 + $3,000

Substituting this information, along with the direct labour costs and manufacturing overhead costs, we get:

Cost of materials purchased = (Materials inventory on March 31 + $3,000) - Materials inventory on March 31 + Direct labour costs + Manufacturing overhead costs

Simplifying, we get:

Cost of materials purchased = $3,000 + Direct labour costs + Manufacturing overhead costs
Cost of materials purchased = $3,000 + $40,000 + $30,000
Cost of materials purchased = $63,000

Therefore, the answer is C) $63,000.

During the Month of March, Cara, Inc