Question

Difference between direct material and indirect material

Answer 1

Direct materials are materials that are consumed during the production of a product as either excess unusable materials or damaged goods.

Indirect materials are materials that are used in the production of a good but they are not monetarily significant that is they cannot be traced directly to a cost of object.

For instance when we add spices to caned beans, the spices are not important in the recipe of the beans and thus we cannot trace the cost.

Answer 2

Direct materials - are those materials that can be easily identified, can be measured conveniently, and can be charged directly to the cost of production. They also form a considerable and noticeable part of the finished product. Simple examples for direct materials are - Cotton used for making a shirt, timber used for making furniture, etc.

Indirect materials - are those materials that cannot be identified conveniently and those that are not allocated to the complete cost of the unit. Also, they do not form an important part of the finished product when it should be sold. It belongs to the category of indirect cost. Although they are important and are used in the production process also, they are not traced directly in the finished product. Examples - nails and screws in the furniture products, the cotton thread used for stitching of a shirt, etc.