Douglas, Inc., employs a normal costing system. The following information pertains to the year just ended. Total manufacturing costs were $2,500,000. Cost of goods manufactured was $2,425,000. Applied manufacturing overhead was 30 percent of total manufacturing costs. Manufacturing overhead was applied to production at a rate of 80 percent of direct-labor cost. Work-in-process inventory on January 1 was 75 percent of work-in-process inventory on December 31. Based on this information, what amount is the total cost of direct material used during the year

Based on the information given the total cost of direct material used during the year is: $812,500.

Using this formula

Total cost of direct material=Direct material + Direct labor + Applied overhead

Where:

Direct material=$2,500,000

Direct labor=30%×$2.500,000=$750,000

Applied overhead=$750,000/.80=$937,500

Let plug in the formula

Total cost of direct material=$2,500,000 - $750,000 - $937,500

Total cost of direct material=$812,500

Inconclusion  the total cost of direct material used during the year is : $812,500.

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$812,500

Explanation:

The computation of the direct material used during the year is shown below:

As we know that

Total manufacturing cost = Direct material + direct labor + applied overhead

where

Applied overhead = 30% of total manufacturing cost

= 30% of $2,500,000

= $750,000

And, the direct labor is

= $750,000 ÷ 0.80

= $937,500

Now the direct material cost is

= $2,500,000 - $750,000 - $937,500

= $812,500

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