Units produced 12 000 15 000
Direct materials $36 000 $45 000
Based on the above data,the direct material costs for producing 7000 units are $21 000.Graduate Attribute: Problem Solving

Question

Quizplus · Accepted Answer

We can use the concept of proportionality to calculate the direct material costs for producing 7000 units:

Direct materials cost / Units produced = Direct materials cost per unit

Using the data given, we can calculate the direct materials cost per unit:

$36 000 / 12 000 units = $3 per unit 
$45 000 / 15 000 units = $3 per unit

Since the cost per unit is the same for both levels of production, we can assume that it will also be $3 per unit for producing 7000 units.

Therefore, the direct material costs for producing 7000 units would be:

Direct materials cost per unit x Units produced = Total direct materials cost 
$3 x 7000 = $21 000

So, the statement "the direct material costs for producing 7000 units are $21 000" is true.

Units Produced 12 000 15 000