Kelita's Kar Kare Kompany had the following cost and inventory data for the month: Costs incurred for the month:
Direct labour $6,900
Indirect labour 1,500
Direct materials purchased 4,500
Factory utilities 2,200
Factory amortization 3,000
Factory supervision 1,200
Inventories:
Ending Beginning
Direct materials $1,500 $1,800
Work in process 4,500 4,050
Finished goods 6,000 5,250
What were the direct costs of production incurred during the month?

Question

Quizplus · Accepted Answer

Direct costs of production include direct labour and direct materials. The direct labour cost incurred was $6,900 and the direct materials purchased were $4,500. Therefore, the total direct costs of production incurred during the month were $6,900 + $4,500 = $11,400. However, since there was a decrease in direct materials inventory from the beginning to the end of the month ($1,800 – $1,500 = $300), this means that only $11,400 – $300 = $11,100 of direct materials were actually used in production. Therefore, the total direct costs of production incurred during the month were $6,900 + $11,100 = $11,700.

Kelita's Kar Kare Kompany Had the Following Cost and Inventory