CMA Intermediate · Cost Accounting · Material Costs
In a cost accounting system, which of the following is the best example of an indirect material for a furniture manufacturing unit producing wooden tables?
Glue, nails and polish used in small quantities across all tables are indirect materials because they cannot be economically traced to a particular table. They are collected as overhead, whereas timber, brass fittings and plywood sheets are directly identifiable with the product and treated as direct materials.
- ATimber used in the tables
- BGlue, nails and polish used in small quantities across all tablesCorrect
- CBrass fittings fixed to each specific table
- DPlywood sheets used in the table tops
Explanation
Indirect materials cannot be conveniently or economically traced to a specific cost unit and are treated as overheads. Glue, nails and polish used in small quantities across all tables fit this. Timber, brass fittings and plywood are identifiable with each table and are direct materials.
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