Direct Material Cost doubt

In the Cost Accounting module for IPCC(Material Capter), they have explained resons as to how Direct Material Costs can increase. I have a doubt in 2 of them:


*Interruption in the flow of materials and hence resuting in stoppage of machines.

*Over stocking of materials.


I understand how they both direcly affect the Total Cost of the firm. But i'm not understanding how they both increase the Direct Materials Cost. Please clarify :)

Replies (2)

overstocking increases carrying cost of materials


interruption in flow of materials ie not purchasing in d right time increases purchase cost

1. As the overstocking of material increases the carrying cost which ultimately increses your material cost. AS-2 describes that you have to take all the cost incurred to bring the inventory to present location & condition in which carrying cost also included.

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