## Material: Meaning, Types & Why Control Matters
### What is Material?
Material refers to all commodities/physical objects used by an organisation to manufacture finished goods.
| Type | Meaning | Example |
|---|---|---|
| Direct Material | Can be easily identified with and directly allocated to a product | Milk in ice-cream |
| Indirect Material | Cannot be easily identified with or directly allocated to a product | Thread used in clothes |
### Why Proper Recording & Control is Critical
1. Quality link: Quality of finished goods (FG) depends on quality of raw material.
2. Cost link: Cost of production of FG depends on purchase cost of raw material.
3. Production continuity: Production stops if the right material in the right quantity is unavailable.
4. Holding cost: Over-stocking raises holding costs, which increases FG cost.
5. Wastage: Material wasted in warehouse or production results in direct losses.
6. Information: Production dept. must always have accurate data on available material quantities.