Answer (D) is correct . Direct materials costs are the costs of new materials included in finished goods that can be feasibly traced to those goods. The beginning direct materials inventory, plus the direct materials purchases, minus ending direct materials inventory equals the direct materials cost. Because the direct materials inventory increased during the month, the increase can be added to the direct materials used to determine the amount of purchases. Thus, the direct materials purchases for the month were $230,000 ($200,000 + $30,000).
Answer (A) is incorrect because The amount of $30,000 represents the increase in June’s inventory and does not include the $200,000 used in production.
Answer (B) is incorrect because The amount of $170,000 subtracts the increase in direct materials inventory.
Answer (C) is incorrect because The amount of $200,000 excludes the increase in direct materials inventory.
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