Assuming the Cost of Direct Materials Used Is $1,500,000, Compute

question 105

Multiple Choice

Assuming the cost of direct materials used is $1,500,000, compute the total manufacturing costs using the information below. $\begin{array}{lll}\text { Raw materials inventory, January 1 } & \$ 30,000 \\\text { Raw materials inventory, December 31 } & 60,000 \\\text { Work in process, January 1 } & 27,000 \\\text { Work in process, December 31 } & 18,000 \\\text { Finished goods, January 1 } & 60,000 \\\text { Finished goods, December 31 } & 48,000\\\text { Raw materials purchases } & 1,500,000 \\\text { Direct labor } & 690,000 \\\text { Factory utilities } & 225,000 \\\text { Indirect labor } & 75,000 \\\text { Factory depreciation } & 500,000 \\\text { Operating expenses } & 630,000\end{array}$

• A)$2,990,000.
• B)$2,981,000.
• C)$2,690,000.
• D)$3,620,000.

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Definitions:

Corporate Shell

A legal entity with no significant assets or operations, often used to facilitate business transactions like mergers or to hold assets.

Control Block

An interest controlling 50% of outstanding votes plus one; thereby it may decide the fate of the firm.

Corporate Takeover

The acquisition of one company by another, either through direct purchase or through the accumulation of a majority of its stock shares.

Distribution

The process of delivering products or services from the producer to the final consumer.