Final answer:
Management consults purchase agents, product managers, and quality control engineers to set standard costs for direct materials, which involves mathematical modeling to estimate costs and understand a firm's cost structure, including fixed and variable costs.
Step-by-step explanation:
When setting standard costs for direct materials, management may consult with various professionals to establish accurate cost figures. Contrary to relying only on engineers, it is a multi-disciplinary process that can involve purchase agents, product managers, and quality control engineers. These stakeholders work collaboratively to analyze costs related to the procurement of materials, the product requirements, and maintaining quality standards.
The math connection in this process involves creating mathematical models that can estimate costs, predict expenses for alternative solutions, and analyze the link between science and costs, which includes materials, fabrication or manufacturing, operation, and maintenance. Understanding the cost structure of the firm, including fixed and variable costs, is crucial. This calculation can provide insights into total cost, average variable cost, average total cost, and marginal cost and is critical for decision-making in the long-run profitability of a firm.