There are $6$ circles: Direct materials used, unused direct materials, finished, unfinished, unsold, and sold. For the circle that you select, clearly describe the flow that it represents, making sure to explain how the cost is incurred, where it comes from, where it goes, and why.

For full credit, be sure to:

Clearly explain how the dollar amount represented by your circle is calculated.

Clearly explain why it is added to the activity $($or financial statement$)$ to which it flows.