The direct material cost is $20,000 when 2,000 units are produced. What is the direct material cost for 2,500 units produced?
A) $15,000
B) $ 5,000
C) $20,000
D) $25,000

Question

Quizplus · Accepted Answer

Direct material cost is directly proportional to the number of units produced. 
So, if 2,000 units require $20,000 of direct material cost, then 2,500 units would require:
Direct Material Cost for 2,500 units = ($20,000/2,000 units) x 2,500 units
= $25,000
Therefore, the correct choice is (D) $25,000.

The Direct Material Cost Is $20,000 When 2,000 Units Are