In Q1, Freja pays $445,500 for raw materials, $247,000 for labor, and $170,250 for MOH. SG&A is $510,000 and equipment spending is $200,000. What is the total Q1 product cost disbursement (direct materials + direct labor + MOH)?

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BlackTom AI · Accepted Answer

Here is the problem restated and analyzed option by option.
Question: In Q1, Freja pays $445,500 for raw materials, $247,000 for labor, and $170,250 for MOH. SG&A is $510,000 and equipment spending is $200,000. What is the total Q1 product cost disbursement (direct materials + direct labor + MOH)?
Answer options:
- $1,572,750
- $1,155,000
- $862,750
- $922,500

Option 1: $1,572,750. To evaluate this, add the components of product cost disbursement (direct materials, direct labor, MOH): 445,500 + 247,000 + 170,250 = 862,750. The value 1,572,750 is higher than the sum of the three manufacturing cost components, and there is no justification to include SG&A or equipment as part of product cost disbursement in this question. This option is incorrect.

Option 2: $1,155,000. This value suggests a miscalculation or missing component. If you tried to total only two of the three numbers (for example 445,500 + 247,000 = 692,500) and attempted a different combination, you still would not reach 1,155,000 with any straightforward combination of the three numbers, so this option does not align with the defined formula (direct materials + direct labor + MOH). This option is incorrect.

Option 3: $862,750. This is exactly the sum of direct materials (445,500) + direct labor (247,000) + MOH (170,250): 445,500 + 247,000 = 692,500; 692,500 + 170,250 = 862,750. Since the question asks for the total Q1 product cost disbursement, which comprises only these three manufacturing cost components, this option is the correct calculation.

Option 4: $922,500. This value could arise from adding one of the components to something else incorrectly (for example adding MOH to two components but missing one). However, the proper product cost disbursement is the sum of direct materials, direct labor, and MOH alone, which equals 862,750, not 922,500. This option is incorrect.

Summary: The correct disbursement is the sum of the three manufacturing costs: 445,500 (direct materials) + 247,000 (direct labor) + 170,250 (MOH) = 862,750. The other options misallocate or omit one or more components, leading to incorrect totals.

SU25_ACT_513_2601 WK10 Pre-Class Check: Complete Master Budget

In Q1, Freja pays $445,500 for raw materials, $247,000 for labor, and $170,250 for MOH. SG&A is $510,000 and equipment spending is $200,000. What is the total Q1 product cost disbursement (direct materials + direct labor + MOH)?

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