The Meaning and Definition of Direct Materials. (Cost Accounting).
Direct materials are those materials which can be identified in the product and can be conveniently measured and directly charged to the product. Thus, these materials directly enter the product and form a part of the finished product. For example, timber in furniture making, cloth in dress making, bricks in building a house. The following are normally classified as direct materials:
- All raw materials like jute in the manufacture of gunny bags, pig iron in foundry and fruits in canning industry.
- Materials specifically purchased for a specific job, process or order like glue for book binding, starch powder for dressing yarn.
- Parts or components purchased or produced like batteries for transistor-radios and tyres for cycles.
- Primary packing materials like cartons, wrappings, card-board boxes etc.
However, in some cases, though the material is a part of the finished product yet it is not treated as direct material; for example, sewing thread in dress making and nails in furniture making. This is because they are used in comparatively small quantities and it would be futile elaboration to make an analysis of them for the purpose of direct charge. Such materials are treated as indirect materials. Thus, it can be concluded that the ease and the feasibility with which a material can be traced into the composition of a finished product will determine what is to be treated as direct material.