What Are Direct Materials?

Refers to various materials and main materials used directly in the production of products, constituting product entities, semi-finished products purchased externally, and auxiliary materials that contribute to product formation, etc., which are consumed in the process of producing products and providing labor services.

direct material

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Refers to various materials and main materials used directly in the production of products, constituting product entities, semi-finished products purchased externally, and auxiliary materials that contribute to product formation, etc., which are consumed in the process of producing products and providing labor services.

Chinese name

direct material

Foreign name

Direct material

Definition

Material costs directly for product production

Including

Standard dosage and standard units

It refers to the cost of materials used directly in the production of products. It includes the standard amount and standard unit cost. The standard amount of materials must first be researched based on technical documents such as product drawings, and list the required materials and possible Substitute materials and explain the type, quality, and

in

The direct material cost difference can be divided into two types: price difference and quantity difference.

(1) Direct material price difference: The cost difference between the actual consumed materials calculated at the actual price and the standard price.

There are many reasons for the difference in direct material prices, such as changes in market prices, changes in the source of material purchases, the size of order quantities, different transportation methods and routes, available quantity discounts, and emergency orders. The predetermined requirements will form a price difference. Therefore, the formation and responsibility of direct material price differences should be analyzed based on specific circumstances, some of which are external reasons, and some of which are the responsibility of the enterprise itself.

Any differences caused by procurement should be responsible for the procurement department, and there are also differences caused by production reasons. For urgent orders, the production department should be responsible. Only by clarifying the reasons and distinguishing responsibilities can the role of price difference calculation and analysis be exerted.

(2) Direct material quantity difference: The cost difference between the actual material consumption quantity and the standard consumption quantity calculated at the standard price.

The factors that affect the difference in the quantity of direct materials are also various, such as technological innovation, comprehensive utilization, repair and reuse of waste, improvement of formula, reasonable cutting, etc., which are all ways to reduce the use of materials; Excellent materials and poor use are important reasons for increasing material consumption. The difference in direct material quantity is usually formed during the production process and should generally be the responsibility of the production department.

However, it may also be caused by procurement. For example, the purchase of poor-quality materials will cause an increase in consumption. The resulting unfavorable differences should be borne by the purchasing department and cannot be attributed to the production department. For the difference of direct material quantity, if there are alternative materials or mixed materials, it can be further decomposed to calculate the structural difference and output difference.