Analysis of Direct Costs Research Paper Example | Topics and Well Written Essays - 250 words

Analysis of Direct Costs - Research Paper ExampleThe other type of costs that is associated with direct material cost analysis, is the material related to costs. These are costs incurred when a firm purchases excess materials to ensure there are adequate materials for production (Drury, 2007). These are costs that come about payable to scrap, overruns, spoilage, and defective parts. Materials not used due to overruns, scrap or spoilage still have residual nurse or salvage value. A bon ton might decide to sell the excess materials or use them for further production, either way adjustments have to be made to include the residual value (Drury, 2007). Where a residual value of the excess materials has been established, a firm might adjust direct material cost by subtracting the estimated residual value (Drury, 2007).To bar problems that arise when analyzing direct materials and direct costs, one should do a further analysis so as to identify ineffective and uneconomical practices (D rury, 2007). This should be through with(p) before any direct cost analysis is carried out so that one could be able