Direct materials refer to the raw materials that are directly incorporated into the production of a finished product. These materials are essential components and can be directly traced to the end product, making them a crucial element in calculating the cost of goods sold. The cost of direct materials is a variable cost, fluctuating with production levels. Accurate tracking of direct material costs is vital for effective cost management and pricing strategies.
Get Your FREE Exam Secrets Cheat Sheet!
Plus a 3-Part CMA Video Course
82,000+ accounting and finance pros got their free CMA cheat sheet.
Get yours too, today!