Which of the following must be true in order for materials to be classified as direct materials? a. They must be an integral part of the finished product and be a significant portion of the total product cost. b. They must be introduced into the process in both work in process inventories and finished goods inventories. c. They must be classified as both prime costs and conversion costs. d. They must be an integral part of the finished product, but can be an insignificant portion of the total product cost.

Question

Business

Barbara Townsend

26 November, 15:55

Which of the following must be true in order for materials to be classified as direct materials? a. They must be an integral part of the finished product and be a significant portion of the total product cost. b. They must be introduced into the process in both work in process inventories and finished goods inventories. c. They must be classified as both prime costs and conversion costs. d. They must be an integral part of the finished product, but can be an insignificant portion of the total product cost.

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Jett · Answer 1

a. They must be an integral part of the finished product and be a significant portion of the total product cost.

Explanation:

The Direct material is supply which is consumed during the production of a product. The direct material should be an integral part in the finished good. Consumables are not direct material. To become direct material the raw supplies should be a significant portion of the total cost. There is no direct material in a service business. The finished product should contain the direct material and the material must be an integral part of the final product.