direct cost can be linked directly to a cost unit.
say
a table requires 4 kg of wood to produce and cost of 1 kg of wood cost $5
so the cost of producing 1 table in terms of material should be (4x5)= $20
in case the store inventory consist of 2 kg wood at a rate of $5/kg
and 2 kg wood at a rate of $6/kg
in that case will the table cost in terms of material should be like (2x5)+(2x6)=10+12=$22
or it will be assumed that material cost per table is constant at $20
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direct cost
9y ago#1It depends on the wording of the question.
Usually we use the standard cost (of $5 per kg) throughout, but again it depends on what the question says and what it asks for.
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