The following information is available for the first month of operations for Bluemoon, Inc.: $\begin{array}{|l|r|}
\hline \text { Sales } & \$ 850,000 \
\hline \text { Gross profit } & 330,000 \
\hline \text { Indirect labor } & 35,000 \
\hline \text { Indirect materials } & 14,000 \
\hline \text { Other factory overhead } & 9,000 \
\hline \text { Materials purchased } & 360,000 \
\hline \text { Total manufacturing costs } & 670,000 \
\hline \text { Materials inventory, end of period } & 20,000 \
\hline
\end{array}$ ? Based on the information provided for Bluemoon, Inc., calculate direct materials cost used in production.
A) $326,000
B) $340,000
C) $360,000
D) $346,000

Question

Quizplus · Accepted Answer

Direct materials cost used in production can be calculated by starting with the materials purchased ($360,000) and adjusting for the change in materials inventory. Since there's an ending inventory of $20,000 and no beginning inventory information is provided, we assume it to be zero. Thus, the calculation is $360,000 (materials purchased) - $20,000 (ending inventory) = $340,000. However, the correct calculation should consider any beginning inventory, which is not provided, leading to a direct calculation error in the explanation. The correct approach to find the direct materials used involves other given data, but with the provided information and typical calculation methods, an error was made in the explanation process. The correct answer is derived from the total manufacturing costs minus indirect labor, indirect materials, and other factory overhead to find the direct materials used, which is not directly calculable with the provided explanation method.

The Following Information Is Available for the First Month of Operations