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. Total purchases can be found based on the beginning and ending inventory, as well as products used. The following formula describes their relationship:
Purchases=Material used+Ending Inventory-Beginning Inventory
The question states that Atlantic used $200,000 of direct materials. Beginning inventory can be set as x, and since the balance of direct materials at the end of the the month was $30,000 more than at the beginning of the month, ending inventory can be set as [x + $30,000].
Thus the formula can be used to solve for purchases as follows:
Purchases = $200,000 + ($x + $30,000) – $x
Purchases = $200,000 + $30,0000 + $x – $x
Purchases = $230,000