Examples of Raw Materials
1. Direct Raw Materials: Direct raw materials involved in furniture manufacturing include timber, wood, cushions, padding for chairs, and cloth fabric for covering chairs. These materials are directly associated with the production of tables and chairs. When calculating the cost on a per-unit basis, these direct raw materials can be precisely traced to each unit, contributing to the overall cost efficiency.
2. Indirect Raw Materials: Indirect raw materials encompass fittings, nails, wood glue, and equipment for workers. Unlike direct materials, these items are not easily traceable to individual units produced, primarily due to their relatively lower quantities or indirect associations. Costs associated with indirect materials, such as glue, nails, and worker equipment, are typically allocated to products through manufacturing overhead. This allocation ensures a fair distribution of these costs across the entire production output, considering their less direct impact on individual units.
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