It is TRUE that, the quality of a finished product does not depend on the quality of the raw materials used to make it.
Raw materials are the stock or input goods that a business needs to manufacture its goods.
A few examples of raw materials are steel, oil, corn, grain, gasoline, lumber, forest resources, plastic, natural gas, coal, and minerals.
Direct raw materials are those that are used directly in the manufacturing process, such as wood for a chair.
Direct raw materials are utilized extensively throughout the production process but do not end up in the finished product.
On the balance sheet, the value of the inventory of direct raw materials is shown as a current asset.
To keep track of their inventory of raw materials, manufacturing companies take special measures. On their balance sheet, this includes three different inventory classifications as opposed to just one for non-manufacturers.
Learn more about Direct raw materials, here
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