The following partially completed T-accounts summarize last year's transactions for Kelshaw Company:At the end of the year, the company closes out the balance in the Manufacturing Overhead account to Cost of Goods Sold.
-What is the cost of direct materials used?
A) $11,000.
B) $12,000.
C) $15,000.
D) $20,000.

Question

The following partially completed T-accounts summarize last year's transactions for Kelshaw Company:At the end of the year, the company closes out the balance in the Manufacturing Overhead account to Cost of Goods Sold.
-What is the cost of direct materials used?
A) $11,000. 
B) $12,000. 
C) $15,000. 
D) $20,000.

Quizplus · Accepted Answer

Direct materials used refers to the cost of the materials that were actually used in the production process. Looking at the information given in the question, the beginning raw materials inventory is not relevant to this calculation, as it represents materials that were not yet used in production. Therefore, we can calculate the cost of direct materials used by taking the sum of the purchases ($25,000) and subtracting the ending raw materials inventory ($13,000). This gives us a cost of direct materials used of $12,000 (B).

The Following Partially Completed T-Accounts Summarize Last Year's Transactions for Kelshaw