Mega Manufacturing's accounting records provide the following information. What is the business direct material cost for the period?
Cost of goods manufactured is $35 000
Ending work in process is $11 500
Manufacturing overhead is $12 700
Direct labour is $8 900
Beginning work in process is $7 500

Question

Quizplus · Accepted Answer

Direct material cost can be calculated using the following formula: 
Direct material cost = Cost of goods manufactured – Ending work in process – Beginning work in process – Direct labour – Manufacturing overhead
Substituting the given values: 
Direct material cost = $35 000 – $11 500 – $7 500 – $8 900 – $12 700 
= $4 400 
Thus, the direct material cost for the period is $17 400 ($4 400 multiplied by 4, as Direct Material Cost is one of the prime costs).

Mega Manufacturing's Accounting Records Provide the Following Information