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Materials costs for keypads are expected to increase by 5% in six months’ time; materials
costs for display screens are only expected to increase by 2%, but with immediate effect.
Material cost for display i got correct but for keypads i didnt get the logic
Direct costs are $160000 for keypad and $116000 for displayGiven that the cost of keypads will not change until 6 months from now, then for the first six months the cost will stay at the rate of $160,000 for 80,000 units. Since in 6 months it will only be 6/12 of the units the cost will be 6/12 x $160,000.
For the second six months the cost increased by 5%, so for the second six months the cost will be 6/12 x $160,000 x 1.05.
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