ECONOMICS

Detailed explanation-1: -Direct material cost is the cost of the raw materials and components used to create a product. The materials must be easily identifiable with the resulting product (otherwise they are considered to be joint costs).

Detailed explanation-2: -Labor costs and overhead costs are not considered direct material costs.

Detailed explanation-3: -1. Direct material. Direct material costs are the costs of raw materials or parts that go directly into producing products. For example, if Company A is a toy manufacturer, an example of a direct material cost would be the plastic used to make the toys.