Direct materials cost

Direct materials cost the cost of direct materials which can be easily identified with the unit of production. For example, the cost of glass is a direct materials cost in light bulb manufacturing.[1]

The manufacture of products or goods required material as the prime element. In general, these materials are divided into two categories. These categories are direct materials and indirect materials.[2]

Direct materials are also called productive materials, raw materials, raw stock, stores and only materials without any descriptive title.

Direct materials cost estimation

Steps to estimate the direct material costs:[3]

  1. Find the total amount to be produced. This is usually noted as the order size.
  2. Calculate the total amount of raw materials required to produce the order size.
  3. Multiply that amount by the cost associated with the raw materials.
  4. If there is a waste or scrap, its cost should be added to the costs in step 3.
  5. If the waste or scrap can be sold at salvage value, this value should be subtracted from the costs in step 4.
gollark: And even then it still has some weirdness.
gollark: Datetimes are very hard. AutoBotRobot has to do a bunch of stuff to make it do even roughly what people expect.
gollark: Although it does rely on JSON for encoding queries and sending results back, I guess.
gollark: Yes, but you can use it for, well, querying things, which is a thing applications often do.
gollark: I feel like you would mostly be better off with JSON and separate schema formats, or maybe GraphQL.

See also

References
  1. Lanen, W. N., Anderson, S., Maher, M. W. (2008). Fundamentals of Cost Accounting, McGraw Hill, ISBN 978-0-07-352672-0
  2. Michael R. Kinney, Cecily A. Raiborn, Cost Accounting: Foundation and Evolution, 7th edition
  3. Phillip W. Gillet, Jr., J.D. notes, Chapter three
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