Conrad, Incorporated recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records.

Cost of Goods Sold $ 71,000
Work-in-Process Inventory, Beginning 12,900
Work-in-Process Inventory, Ending 10,200
Selling and Administrative Expense 18,000
Finished Goods Inventory, Ending 18,300
Finished Goods Inventory, Beginning ?
Direct Materials Used ?
Factory Overhead Applied 13,200
Operating Income 14,660
Direct Materials Inventory, Beginning 11,540
Direct Materials Inventory, Ending 6,420
Cost of Goods Manufactured 65,640

Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The Chief Financial Officer of Conrad, Incorporated has asked you to recalculate the following accounts and to report to him by the end of the day.

What is the amount of direct materials used?

When the cost of goods manufactured is given, it is possible to compute any missing entry (e.g. the cost of direct materials) from the above equation.

Data and Calculaitons:

Work-in-Process Inventory, Beginning 12,900

Factory Overhead Applied 13,200

Direct labor = $19,800 ($13,200 x 1.5)

Work-in-Process Inventory, Ending 10,200

Computation of the Direct Materials Costs:

Debit Credit

Work-in-Process Inventory, Beginning $12,900

Factory Overhead Applied 13,200

Direct labor 19,800

Direct materials 29,940

Cost of Goods Manufactured $65,640

Work-in-Process Inventory, Ending 10,200

Totals $75,840 $75,840

Thus, the amount of direct materials used by Conrad, Incorporated is $29,940.

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