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Direct Materials are: Select one:

a. Materials outlined in the BOM and can be directly costed to the end productb. Materials used by Departments for discharging their functions like Furniture, Computers etcc. Materials used in repair and maintenanced. All the above

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Question added by Wasi Rahman Sheikh , WAREHOUSE SUPERVISOR , AL MUTLAQ FURNITURE MFG
Date Posted: 2015/04/03
Wasi Rahman Sheikh
by Wasi Rahman Sheikh , WAREHOUSE SUPERVISOR , AL MUTLAQ FURNITURE MFG

Answer will be option a) Materials outlined in the BOM and can be directly costed to the end product

Vinod Jetley
by Vinod Jetley , Assistant General Manager , State Bank of India

What are directmaterials?Direct materials are those materials and supplies that are consumed during the manufacture of a product, and which are directly identified with that product. Items designated as direct materials are usually listed in the bill of materials file for a product. The bill of materials itemizes the unit quantitiesand standard costs of all materials used in a product, and may also include an overhead allocation.The direct materials concept includes any scrap and spoilage incurred during the manufacturing process. Scrap is the excess unusable material remaining after a product has been manufactured. Spoilage is goods that are damaged.Direct materials do not include any materials that are consumed as part of the general overhead of a business. For example, the air filters used in the ventilation system of a manufacturing facility are not direct materials; they are instead included in manufacturing overhead. Conversely, the wood used to construct furniture that is to be sold is classified as direct materials.Direct materials are measured using two variances, which are:Material yield variance. This is the difference between the actual amount of material used and the standard amount expected to be used, multiplied by the standard cost of the materials.Purchase price variance. This is the difference between the actual price paid to buy an item and its standard price, multiplied by the actual number of units purchased.Direct materials is an important concept in throughput analysis, where throughput is the revenue generated by a product sale, less all totally variable costs. In most situations, the only totally variable costs associated with a product are its direct materials. Direct labor is not totally variable in most situations, and so is usually not included in the throughput calculation. Hence the answer is:a

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