• DIC extends services of the following nature
Answer
A.O Economic investigation of the local resources
CO Provision of raw material
B.O Supply of machinary and materials
D.O All the above
Answers
Answer:
What Are Raw Materials?
Raw materials are materials or substances used in the primary production or manufacturing of goods. Raw materials are commodities that are bought and sold on commodities exchanges worldwide. Traders buy and sell raw materials in what is called the factor market because raw materials are factors of production as are labor and capital.
Direct and Indirect Raw Materials
In some cases, raw materials may be divided into two categories: direct and indirect. Whether a raw material is direct or indirect will influence where it is reported on the balance sheet and how it is expensed on the income statement.
Direct raw materials are materials that companies directly use in the manufacturing of a finished product, such as wood for a chair. Indirect raw materials are not part of the final product but are instead used comprehensively in the production process.
Indirect raw materials will be recorded as long-term assets. Within long-term assets, they can fall under several different categories including selling, general, and administrative or property, plant, and equipment. Long-term assets usually follow some depreciation schedule which allows the assets to be expensed over time and matched with revenue they help to produce. For indirect raw materials, depreciation timing will usually be shorter than other long-term assets like a building expensed over several years.
Direct raw materials are placed in current assets as discussed above. Direct raw materials are expensed on the income statement within cost of goods sold. Manufacturing companies must also take added steps over non-manufacturing companies to create more detailed expense reporting on costs of goods sold. Direct raw materials are typically considered variable costs since the amount used depends on the quantities being produced.
Direct Raw Materials Budget
A manufacturer calculates the amount of direct raw materials it needs for specific periods to ensure there are no shortages. By closely tracking the amount of direct raw materials bought and used, an entity can reduce unnecessary inventory stock, potentially lower ordering costs, and reduce the risk of material obsolescence.
Raw materials may degrade in storage or become unusable in a product for various reasons. In this case, the company declares them obsolete. If this occurs, the company expenses the inventory as a debit to write-offs and credits the obsolete inventory to decrease assets.
Direct Raw Materials Budget
A manufacturer calculates the amount of direct raw materials it needs for specific periods to ensure there are no shortages. By closely tracking the amount of direct raw materials bought and used, an entity can reduce unnecessary inventory stock, potentially lower ordering costs, and reduce the risk of material obsolescence.
Raw materials may degrade in storage or become unusable in a product for various reasons. In this case, the company declares them obsolete. If this occurs, the company expenses the inventory as a debit to write-offs and credits the obsolete inventory to decrease assets.
KEY TAKEAWAYS
The primary production or manufacturing of goods requires raw materials.
The value of direct raw materials inventory appears as a current asset on the balance sheet.
Africa, the Middle East, and China have the world's largest supplies of natural resources as a percentage of their GDP.