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24 February, 18:42

Bottum Corporation, a manufacturing Corporation, has provided data concerning its operations for May. The beginning balance in the raw materials account was $27,000 and the ending balance was $50,000. Raw materials purchases during the month totaled $77,000. Manufacturing overhead cost incurred during the month was $118,000, of which $3,400 consisted of raw materials classified as indirect materials. The direct materials cost for May was:

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  1. 24 February, 18:43
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    The direct materials cost for May was $50,600

    Explanation:

    The computation of the direct materials cost is shown below:

    = Beginning balance of raw material + purchase during the month - indirect raw material - ending balance of raw material

    = $27,000 + $77,000 - $3,400 - $50,000

    = $50,600

    For computing the actual amount of the direct material we have to deduct the indirect raw material and the ending balance too.
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