2. Indirect material
It is not always possible or economically justifiable to apportion all raw materials to individual products. Such costs are for instance the apportioning of glue, nails, cotton and welding rods. The latter costs are called “indirect material”, which form part of direct manufacturing overhead costs discussed in the next section.
In some cases indirect material does not form part of the final product.
|Example:- Indirect material The other material used in the manufacturing process, which is difficult to allocate to a specific product, are sanding paper, cutting disks, drills, needles, cleaning material etc.|
|Where the material does form part of the end product and calculating the amount of material used in the product is very difficult, that material will form part of the indirect material costs.|