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:

Monopoly Power

The ability of a single seller or firm to control the market price and output of a particular product or service, often resulting in limited choices and higher prices for consumers.

Demand Curve

A chart that illustrates how the demand for a product varies with its price, usually showing a downward trend.

Profit-Maximizing Level

The level of production at which a firm achieves the maximum possible profit.

Unit Elastic

A situation where a one percent change in price leads to an exactly one percent change in the quantity demanded or supplied.