The Falcon Company Does Not Maintain Backup Documents for Its

question 109

Multiple Choice

The Falcon Company does not maintain backup documents for its computer files. In June, some of the current data were lost, and you have been asked to help reconstruct the data. The following beginning balances on June 1 are known:
$\begin{array}{lr}\text { Direct Materials Inventory } & \$ 12,000 \\\text { Work-in-Process Inventory } & 4,500 \\\text { Finished Goods Inventory } & 11,000 \\\text { Manufacturing Overhead Control } & 16,500 \\\text { Accounts Payable } & 6,000\end{array}$

Reviewing old documents and interviewing selected employees have generated the following additional information:
The production superintendent's job cost sheets indicated that materials of $2,600 were included in the June 30 Work-in-Process Inventory. Also, 300 direct labor-hours had been paid at $6.00 per hour for the jobs in process on June 30.
The Accounts Payable account is only for direct material purchases. The clerk remembers clearly that the balance in the Accounts Payable on June 30 was $8,000. An analysis of canceled checks indicated payments of $40,000 were made to suppliers during June.
Payroll records indicate that 5,200 direct labor-hours were recorded for June. It was verified that there were no variations in pay rates among employees during June.
Records at the warehouse indicate that the Finished Goods Inventory totaled $16,000 on June 30.
Another record kept manually indicates that the Cost of Goods Sold in June totaled $84,000.
The predetermined overhead rate was based on an estimated 60,000 direct labor-hours for the year and an estimated $180,000 in manufacturing overhead costs.
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What is the amount of direct materials purchased during June?

• A) $38,000.
• B) $40,000.
• C) $42,000.
• D) $43,000.

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