The Falcon Company does not maintain backup documents for its computer files. In

ID: 2342000 • Letter: T

Question

The Falcon Company does not maintain backup documents for its computer files. In June, some of the current data were lost, and you have been asked to help reconstruct the data. The following beginning balances on June 1 are known:

Reviewing old documents and interviewing selected employees have generated the following additional information:

The production superintendent's job cost sheets indicated that materials of $3,700 were included in the June 30 Work-in-Process Inventory. Also, 410 direct labor-hours had been paid at $7.00 per hour for the jobs in process on June 30.

The Accounts Payable account is only for direct material purchases. The clerk remembers clearly that the balance in the Accounts Payable on June 30 was $9,100. An analysis of canceled checks indicated payments of $51,000 were made to suppliers during June.

Payroll records indicate that 6,300 direct labor-hours were recorded for June. It was verified that there were no variations in pay rates among employees during June.

Records at the warehouse indicate that the Finished Goods Inventory totaled $18,200 on June 30.

Another record kept manually indicates that the Cost of Goods Sold in June totaled $95,000.

The predetermined overhead rate was based on an estimated 71,000 direct labor-hours for the year and an estimated $355,000 in manufacturing overhead costs.

What is the amount of direct materials purchased during June?

$49,000.

$51,000.

$53,000.

$56,000.

Direct Materials Inventory $ 13,100 Work-in-Process Inventory 5,600 Finished Goods Inventory 14,100 Manufacturing Overhead Control 27,500 Accounts Payable 7,100

Explanation / Answer

Answer

Accounts Payable balance on June 30

$ 9,100.00

Cash payment made to suppliers during June

$ 51,000.00

Accounts Payable balance on June 1

$ 7,100.00

D = A+B - C

Amount of Direct Material Purchased

$ 53,000.00

Correct Answer

Option #3: $ 53,000