Nextel Company showed the following on its direct materials budget for June: $\begin{array}{lr}
\text { Units to be produced } & 25,000 \
\text { Total kilograms needed for production } & 10,000 \
\text { Total kilograms of materials to be purchased } & 9,000
\end{array}$ The materials cost $2 per kilogram.How much is the cost of direct materials per unit?
A)$0.80
B)$0.72
C)$1.52
D)$5.00

Question

Quizplus · Accepted Answer

The cost of direct materials per unit is calculated by dividing the total cost of materials needed for production by the number of units to be produced: $(10,000 \text{ kg} \times \$2/\text{kg}) / 25,000 \text{ units} = \$0.80$ per unit.

Nextel Company Showed the Following on Its Direct Materials Budget