Using the Following Information, Compute the Cost of Direct Materials

question 7

Multiple Choice

Using the following information, compute the cost of direct materials used. $$\begin{array} { l r } \text { Raw materials inventory, January 1 } & \$ 30,000 \\\text { Raw materials inventory, December 31 } & 60,000 \\\text { Work in process, January 1 } & 27,000 \\\text { Work in process, December 31 } & 18,000 \\\text { Finished goods, January 1 } & 60,000 \\\text { Finished goods, December 31 } & 48,000 \\\text { Raw materials purchases } & 1,800,000 \\\text { Direct labor } & 890,000 \\\text { Factory utilities } & 225,000 \\\text { Indirect labor } & 75,000 \\\text { Factory depreciation } & 500,000 \\\text { Operating expenses } & 630,000\end{array}$$

• A) $1,740,000.
• B) $1,830,000.
• C) $1,800,000.
• D) $1,770,000.

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Definitions:

Business Cycle

The fluctuation in economic activity that an economy experiences over a period of time, consisting of expansion (growth) and contraction (recession) phases.

High Point

The highest value or peak that an economic indicator or a market index reaches over a specific time period.

Capital Goods

Long-lasting goods used in the production of other goods or services, such as buildings, machinery, and equipment.

Money Supply

This refers to the total amount of monetary assets available in an economy at a specific time.