Direct materials cost is the cost of direct materials which can be easily identified with the unit of production. For example, the cost of glass is a direct materials cost in light bulb manufacturing.

The manufacture of products or goods required material as the prime element. In general, these materials are divided into two categories. These categories are direct materials and indirect materials.

Direct materials are also called productive materials, raw materials, raw stock, stores and only materials without any descriptive title.

Direct materials cost estimation

Steps to estimate

Estimation

Estimation is the calculated approximation of a result which is usable even if input data may be incomplete or uncertain.In statistics,*estimation theory and estimator, for topics involving inferences about probability distributions...

 the direct material costs:

1. Find the total amount to be produced. This is usually noted as the order size.
2. Calculate the total amount of raw materials required to produce the order size.
3. Multiply that amount by the cost associated with the raw materials.
4. If there is a waste
   Waste
   Waste is unwanted or useless materials. In biology, waste is any of the many unwanted substances or toxins that are expelled from living organisms, metabolic waste; such as urea, sweat or feces. Litter is waste which has been disposed of improperly...
   
    or scrap
   Scrap
   Scrap is a term used to describe recyclable and other materials left over from every manner of product consumption, such as parts of vehicles, building supplies, and surplus materials. Unlike waste, scrap has significant monetary value...
   
   , its cost should be added to the costs in step 3.
5. If the waste or scrap can be sold at salvage value, this value should be subtracted from the costs in step 4.

See also

• Variance analysis (accounting)
• Direct material total variance
  Direct material total variance
  In variance analysis direct material total variance is the difference between the actual cost of actual number of units produced and its budgeted cost in terms of material...
  
  
• Direct material price variance
  Direct material price variance
  In variance analysis direct material price variance is the difference between the standard cost and the actual cost for the actual quantity of material used or purchased...
  
  
• Direct material usage variance
  Direct material usage variance
  In variance analysis direct material usage variance is the difference between the standard quantity of materials that should have been used for the number of units actually produced, and the actual quantity of materials used, valued at the standard cost per unit of material...