Question

Machine Builders Inc. adopted a standard cost system several years ago that it uses in conjunction with its process cost system. The per-unit standard costs for direct materials and direct labor for its single product are as follows: $ 88 Materials: (8 kilograms x $11 per kilogram) Labor: (7 hours x $18 per hour) $ 126 All materials are issued at the beginning of processing. The operating data shown below were taken from the records for July In-process beginning inventory In-process ending inventory-90% complete as to labor Units completed during the month Budgeted output Purchases of materials, in kilograms (AQ) Total actual labor costs incurred Direct labor hours worked (AQ) Materials purchase-price variance Increase in materials inventory in July Beginning inventory of materials none 1,200 units 6,700 units 7,700 units 23,000 $527,000 26,000 hours $ 3,400 unfavorable 1,100 kilograms ke. The actual total cost of direct materials used in production during July, to the nearest dollar, was: (Round your intermediate calculations to 2 decimal places.) 0 $238.485. O $244.185. $253,335 O $256,335 $259.335.

Answer 1

The actual cost of direct materials used means the cost of total materials produced excluding the inventory resulting to increase In inventory.

Material purchase- Price variance is unfavorable as given along other data

Material purchase- Price variance = (Actual price- standard price) * Actual quantity

Or, 3400 = (AP-11)*23000

Or, 3400 = 23000 AP – 253000

Or, 23000 AP = 256400

Or, AP = $ 11.15 (Rounded off)

Actual cost of materials used in production = kg. of material issued to production × actual cost per kg

   = (23000 kg purchased – 1100 increase in inventory)*11.15

                                                              =21900*11.15    

    = $ 244,185

Hence, the correct option is $ 244,185

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