What Is a Direct Material Cost?

Direct material cost refers to the cost of materials used directly in the production of products, and it includes two aspects of standard usage and standard unit cost.

Direct material cost

Right!

Direct material cost refers to the cost of materials used directly in the production of products, and it includes two aspects of standard usage and standard unit cost.

Chinese name

Direct material cost

Foreign name

direct-material costs

Field

accounting

Including

Standard dosage and standard

Direct material cost refers to the cost of materials used directly in the production of products, and it includes two aspects of standard usage and standard unit cost. The standard amount of materials, first of all, according to the product drawings and other technical documents to conduct product research, list the required materials and possible alternative materials, and explain the type, quality and inventory of these materials.

Secondly, through the analysis of the past experience of using materials, the average value, or the average of the highest and lowest values, or the most saved amount, or through actual measurement, or technical analysis of data, scientifically formulate the dosage standards.

Accounting for direct material costs:

When the consumption quota is relatively stable and accurate, it is usually used

Direct material cost audit:

An audit of direct material costs should generally begin with reviewing materials and

Adjustment analysis of direct material costing

The direct material cost consumed in production is mainly converted from the purchase cost of raw material inventory or the acquisition cost from other channels. The adjustment of direct material cost accounting is mainly reflected in:

First, if the inventory of raw materials used for production is lower than the cost, it is necessary to make provision for inventory depreciation and confirm the corresponding asset impairment loss, which is included in the current profit and loss; for the raw materials used in production, working materials Waiting for inventories, the inventory depreciation reserve has been accrued, it is necessary to carry forward its inventory depreciation reserve at the same time, that is, debit the "inventory depreciation reserve" account, credit the "production cost", "manufacturing expenses" and other subjects; product inventory for sales , Its price reduction criteria were carried forward in the period in which sales revenue was recognized, offsetting the cost of goods sold. This treatment ensures that the basic uniformity of accounting treatment is maintained when all asset impairment provisions are resold.

Second, the cost of production materials can be measured using FIFO, weighted average, and individual valuation methods. The application guide further states that the weighted average method can include the moving average method used in traditional accounting practices, or it can Weighted average once a month. The new standard has eliminated the LIFO method.