Question

Information from the records of Chrome Ponies Enterprises for June 2018 is as follows:

a) Sales $41,000
b) Direct Labor $10,000
c) Selling and admin. expenses $7,000
d) Direct materials purchases $6,000 Factory overhead $13,500
Inventories
a) June 1, 2018 June 30, 2018
b) Direct materials $1,200 $1,300
c) Work in process $2,500 $2,800
d) Finished goods $2,300 $1,900
What was the cost of materials used in production?
a) $6,200
b) $6,000
c) $5,900
d) $19,500

Answer 1

The correct answer is option c) $5,900.

Step-by-step explanation:

To calculate the cost of materials used in production for Chrome Ponies Enterprises, we use the formula:

• Cost of Materials Used = Beginning Inventory of Direct Materials + Purchases of Direct Materials – Ending Inventory of Direct Materials.

From the information given:

• Beginning Inventory of Direct Materials (June 1, 2018) = $1,200
• Purchases of Direct Materials in June 2018 = $6,000
• Ending Inventory of Direct Materials (June 30, 2018) = $1,300

Now, let's perform the calculation:

• Cost of Materials Used = $1,200 + $6,000 – $1,300
• Cost of Materials Used = $5,900

Therefore, the cost of materials used in production is $5,900.