Question

What is Direct Material Cost and why is it important?

Answer 1

Direct materials cost :

Direct material cost is the direct cost incurred in producing the products. In other words, it is the cost of materials which can be easily traced back to the units produced.

Importance of direct materials cost :

Generally, direct materials is the major cost component for many of the manufacturing companies. By tracking the cost of direct materials, the cost managers can bring in changes that lead to reduction of overall production costs.