What type of products does direct materiel typically refer to?

Direct material typically refers to items that are integral to the final product. These are the raw materials and components that are transformed during the production process to create the finished goods. For example, in the manufacturing of a vehicle, steel, rubber, and glass are all direct materials, as they directly contribute to the construction and functionality of the vehicle.

Understanding the concept of direct materials is essential for effective inventory management, cost control, and production planning, as they significantly impact the overall cost and quality of the final product. This distinction helps businesses manage their supply chains more efficiently, ensuring that the necessary direct materials are available when needed for production.