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

Question

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

Quizplus · Accepted Answer

The cost of direct materials per unit is calculated by dividing the total cost of materials by the number of units produced. Total cost = 10,000 kg * $2/kg = $20,000. Cost per unit = $20,000 / 25,000 units = $0.80.

Nextel Company Showed the Following on Its Direct Materials Budget