Using the Following Information, Compute the Direct Materials Used A)$1,760,000

question 85

Multiple Choice

Using the following information, compute the direct materials used. $\begin{array}{lll}\text { Raw materials inventory, January 1 } & 20,000 \\\text { Raw materials inventory, December } 31 & 40,000 \\\text { Work in process, January 1 } & 18,000 \\\text { Work in process, December 31 } & 12,000 \\\text { Finished goods, January 1 } & 40,000 \\\text { Finished goods, December 31 } & 32,000\\\text { Raw materials purchases } & 1,700,000 \\\text { Direct labor } & 760,000 \\\text { Factory utilities } & 150,000 \\\text { Indirect labor } & 50,000 \\\text { Factory depreciation } & 400,000 \\\text { Operating expenses } & 420,000\end{array}$

• A)$1,760,000.
• B)$1,720,000.
• C)$1,700,000.
• D)$1,680,000.

Understand the requirements of GAAP in product costing.

Analyze the financial impact of production levels on reported income under different costing methods.

Identify product costs that can be directly traced to the product.

Understand how expenses are categorized on a contribution margin income statement.

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Definitions:

Picture Frame Store

A retail shop specializing in selling frames for artwork, photographs, and other decorative wall hangings.

Break-even

The point at which total costs and total revenues are equal, resulting in no net loss or gain.

Unit Variable Costs

The costs that vary directly with the level of production or output.

Revenue

The total amount of money received by a company for goods sold or services provided during a certain time period.