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What is the difference between direct and indirect material?

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posted Jun 16 by Anushka

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1 Answer

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Difference between direct material and indirect material
First of all this fall under category of classification on basis of nature . When you classify cost
So direct material + direct employee + direct expense = prime cost
Indirect material +indirect employee +indirect expense = overheads
But so difference between direct material and indirect material
A material is said to be direct material if its satisfy all three condition :
1. Directly traceable
2. Become integral part of finished good
3. Increase volume of finished good

So you can apply these condition if all are fulfill than it is direct material otherwise indirect material.

answer Jun 17 by Swati Tyagi
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