Question

Data for the cost of direct materials for the month ended March 31, 2019, are as...

Data for the cost of direct materials for the month ended March 31, 2019, are as follows:

 Materials inventory, March 1, 2019 \$76,000 Materials inventory, March 31, 2019 70,000

During March, the company purchased \$260,000 of raw materials on account from Reed Company and \$92,000 of raw materials for cash from Frye Company. In addition, \$50,000 was paid on the Reed account balance.

Compute the cost of direct materials used during March.

 Cost of direct materials during March \$

Solution :

Cost of Direct Material Used = Opening Inventory + Purchases of Inventory - Closing Inventory

Purchases of Inventory = Purchases from Reed Company + Purchases from Frye Company

Purchases of Inventory = \$ 260,000 + \$ 92,000

Purchases of Inventory = \$ 352,000

Cost of Direct Material Used = \$ 76,000 + \$ 352,000 - \$ 70,000

Cost of Direct Material Used = \$ 358,000.

Note : Payment made to reed company is not the purchases.

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