Cai Corporation uses a job-order costing system and has provided the following partially completed T-account summary for the past year. The cost of indirect materials requisitioned for use in production during the year was:
A) $74,000
B) $10,000
C) $40,000
D) $13,000

Question

Cai Corporation uses a job-order costing system and has provided the following partially completed T-account summary for the past year.   The cost of indirect materials requisitioned for use in production during the year was:
A) $74,000 
B) $10,000 
C) $40,000 
D) $13,000

Quizplus · Accepted Answer

The only account that directly reflects indirect materials is Manufacturing Overhead, which had a beginning balance of $36,000, added $4,000 of indirect materials during the year, and had an ending balance of $30,000. Therefore, the cost of indirect materials requisitioned for use in production during the year was $4,000 (beginning balance) + $10,000 (indirect materials added) - $30,000 (ending balance) = $-16,000, which is not a logical answer. Since there were no other accounts that directly reflected indirect materials, the only logical answer is B, which is the amount of indirect materials included in the total manufacturing costs incurred during the year ($400,000).

Cai Corporation Uses a Job-Order Costing System and Has Provided