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Chapter 16: Q16-8SE (page 887)

Computing direct materials used

Tuscany, Inc. has compiled the following data:

Purchases of Direct Materials $ 6,300

Freight In 400

Property Taxes 800

Ending Direct Materials 1,300

Beginning Direct Materials 4,100

Compute the amount of direct materials used.

Short Answer

Expert verified

The direct material used by the Tuscany Inc is $9,500

Step by step solution

01

Definition of Direct Material

The direct material is defined as the cost incurred by the business on the raw material which is used in the production process directly.

02

Computation of direct material

Computation of Direct Material Used

Amount ($)

Beginning Direct Materials

$4,100

Add: Purchase of direct materials

$6,300

Add: Freight in

$400

Direct Materials Available

$10,800

Less: Ending Direct Material

-$1,300

Direct Material used

$9,500

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Most popular questions from this chapter

Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:

c. Cost of electricity at the paper mill

Selected data for three companies are given below. All inventory amounts are ending balances and all amounts are in millions.

Company A Company B Company C

Cash \( 6 Wages Expense \) 12 Administrative Expenses $ 4

Net Sales Revenue 48 Equipment 32 Cash 25

Finished Goods Inventory 10 Accounts Receivable 8 Net Sales Revenue 75

Cost of Goods Sold 23 Service Revenue 65 Selling Expenses 8

Selling Expenses 4 Cash 34 Merchandise Inventory 12

Equipment 67 Rent Expense 12 Equipment 55

Work-in-Process Inventory 9 Accounts Receivable 19

Accounts Receivable 14 Cost of Goods Sold 25

Cost of Goods Manufactured 23

Administrative Expenses 7

Raw Materials Inventory 6

Using the data on the previous page, calculate total current assets for each company

Question:Gateway produces electronic calculators. Suppose Gateway鈥檚 standard cost per calculator is \(25 for direct materials and \)68 for conversion costs. The following data applyto August activities:

Direct materials purchased (on account) \( 8,300

Conversion costs incurred 20,500

Number of calculators produced 300 calculators

Number of calculators sold (on account, at \)105 each) 295 calculators

Requirements

1. Prepare summary journal entries for August using JIT costing, including the entryto adjust the Conversion Costs account.

2. The beginning balance of Finished Goods Inventory was $1,300. Use a T-accountto find the ending balance of Finished Goods Inventory.

Comparing managerial accounting and financial accounting For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA):

b. Provides detailed reports on parts of the company.

Calculating income and cost per service for a service company

Buddy Grooming provides grooming services for pets. In April, the company earned \(16,300 in revenues and incurred the following operating costs to groom 660 dogs:

Wages Expense \) 4,061

Grooming Supplies Expense 1,675

Building Rent Expense 900

Utilities Expense 305

Depreciation Expense鈥擡quipment 55

Requirements 1. What is Buddy鈥檚 operating income for April?
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