Indirect Material Cost

It is an expense, which is included in Overhead Cost of manufacturing cost, and consists of subsidiary material cost, shop supplies cost, perishable tools and equipment cost. Here the material means the one indirectly or supplementarily consumed. Specifically speaking, subsidiary material cost includes the cost of fuel, oil, paint, drug, and packaging medium, while shop supplies cost includes lubricant oil, both of which are indirectly or supplementarily consumed. In addition, perishable tools and equipment cost refers to consumption costs of tools, devices, and equipment with a useful life-span of one year or less.


Related term: Overhead Cost