Direct material costs

Bei den Materialeinzelkosten handelt es sich um die Grundlage für die Umlage der Material overhead. Sie sind ein essentieller Teil der Kosten-Leistungs-Rechnung.

Definition / explanation

The direct material costs are the costs that are necessary to manufacture a product. So it is the cost of ...

raw materials from which the product is made
Auxiliary materials that are used in production
Semi-finished products which are further processed

When manufacturing a cabinet, the wood is raw materials and the glue and screws are auxiliary materials.

For example, if the cabinet doors are delivered ready-made, they represent semi-finished products. According to Section 255 of the German Commercial Code (HGB), these are to be recorded in the balance sheet assets.

Imputability

Another criterion for determining the direct material costs is the attribution to a single, determinable product.

The wood for the cabinet is to be assigned directly to it. As a result, the costs incurred for this cabinet must be booked as direct material costs.

The aids used for the machines pose a problem, however, because they cannot easily be assigned to the end product. Therefore this is Material overhead.

Material direct costs in cost accounting

The respective price of the individual product depends on the individual material costs. Because the more costs have to be expended for the production of the individual product, the higher the selling price.

As the number of items increases, so does the sum of the direct material costs in cost accounting. However, when producing a large number of items, any quantity discounts must be taken into account when purchasing. As a result, the direct material costs will tend to decrease.

Summary

  • The direct material costs are the costs that can be directly assigned to a product
  • Raw materials, auxiliary materials and semi-finished products relate to these costs
  • they directly influence the price of a product because they are directly attributable to it
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