All production costs other than direct materials and direct labor are listed in the selling and administrative expense budget. It is true.
Direct materials are those materials and supplies that are used in the production of a product and are specifically associated with it. The bill of materials file for a product often contains a list of items that have been classified as direct materials. The bill of materials lists the unit pricing and unit quantities of every material used in a product, and it may include allocate any overhead charges.
Any waste products from the manufacturing process, such as scrap and spoilage, are included in the direct materials concept. Scrap is the surplus of useless material left over after a product has been produced. Damaged products are spoiled.
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