Question

Ex-3. Plum Company manufactures plastic coated metal clips. The following were among Plum Company 2017 manufacturing costs: $ Wages: Machine operators Maintenance workers Factory foreman 200,000 30,000 90,000 Materials used: Metal wire Lubricant for oiling machinery Plastic coating 500,000 10,000 380,000 Required: Compute for the amount of direct materials for Plum Company in 2017.

Answer 1

The answer is $880,000

Calculations and explanation"

Direct materials = metal wire + plastic coating

= 500,000 + 380,000

= $880,000

It should be noted that $10,000 for lubricant for oiling machinery is not a direct materials cost and is a manufacturing overhead.