What is Direct Material? Definition and Meaning

                                                                                       

Direct material is the material which can be conveniently identified and traceable. it refers to material out of which the product is manufactured, for example, leather-shoes are produced out of leather, butter is produced out of milk, steel utensils are produced out of stainless steel and many more examples could be.


Thus, leather, milk, and stainless steel are the direct materials for the manufacture of shoes, butter, and steel utensils respectively. More than one material could be directly required for production and it depends on the production. Direct materials are measured using two variances, which are:


Material yield variance-

This is the difference between the actual amount of material used and the standard amount expected to be used, multiplied by the standard cost of the materials.


Purchase price variance-

This is the difference between the actual price paid to buy an item and its standard price, multiplied by the actual number of units purchased.


Category and Tags
Add a comment
More stories by
Robi Will Raise Tk 5.2b Through IPO

Robi, the country's second largest mobile phone operator, has started preparations to enter the capital market. Robi's parent company Axiata has also given conditional permission to raise Tk 523 crore from the Bangladeshi capital market through an in

Social Media- a New Marketing Tool: A Case Study on Bangladeshi Market

Prepared by:Shakila Islam EvanaLecturer (Marketing)Tejgoan Mohila CollegeAbstractSocial Media, today, is among the ‘best opportunities available’ to a brand for connecting with p...

Bangladeshi University Students to Get Loan for Smartphone From Government

All educational institutions in the country have been closed for a long time due to the ongoing pandemic Coronavirus. In this situation, educational activities are being carried out ...

Japan Will Provide Subsidy if the Factory is Brought to Bangladesh from China

The Japanese government has announced to subsidize its industrialists if they move their factories from China to Bangladesh to produce goods. The co...

Early Success in the Project of Placing Chips in the Human Brain!

Elon Musk's reputation as an entrepreneur is worldwide. Two of his most popular ventures are Tesla and SpaceX. In addition to these, he is moving forward with another different project. His new project is called Neur...

Follow Business Habit on Facebook, Twitter