Material Costs

Definition

The sum of the direct material costs of all direct cost material types used and the material overhead.

• Material direct costs record the material consumption for the production of the cost object or order to be costed and the value of the material per unit of measure.
• Material overhead costs include the costs incurred by purchasing, storing, and managing the material. They are allocated as a percentage of the direct material costs. The material overhead is calculated in Cost Center Accounting from the periodic material direct costs and material overhead.