Wages and related costs of factory employees, such as inspectors and maintenance crews, whose time is not charged to specific finished products; sometimes combined with indirect materials costs, such as supplies, to derive indirect costs.
Indirect materials are those materials that do not feature in the final product but are necessary to carry out the production process. Examples include machine oil, cleaning materials, and consumable materials.
Materials represent the production supplies that are acquired by an organization as revenue expenditure from third parties. These are essential for manufacturing final products and are categorized into direct and indirect materials.
Materials cost is the expenditure incurred by an organization on direct or indirect materials. The expenditure on direct materials is part of the direct cost of sales, whereas the expenditure on indirect materials is categorized as manufacturing overhead.
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