Are you a business owner in the manufacturing industry? Or currently working and managing finances in the manufacturing industry? You must be familiar with raw materials and supporting materials? Both of these materials are the biggest resources in manufacturing companies. Where, the transaction will be recorded in the post of raw material (Raw Material) and supporting material (component).
Although familiar, many people often make mistakes because it is difficult to determine whether these expenditures go into raw materials or supporting materials. For some industries such as the assembly field, determining where the post of raw materials and supporting materials is very easy, where the two types can be distinguished more easily. However, this error is often found in manufacturing companies that produce goods with a single raw material such as cement factories, flour factories, and so on. That’s why the Journal here will help you easily distinguish raw materials and supporting materials. What is the difference between raw material and supporting material? Check out below.
What are Raw Materials & Auxiliaries?
Raw materials are the main ingredients needed to make goods produced. Where, these goods must be processed and through a process to be made into other forms, both finished and semi-finished goods that can be used to meet the needs of human life.
Meanwhile, auxiliary materials are materials needed to fulfill the production process which is only used for a certain time, for example when a company wants to increase efficiency in a production.
Then what distinguishes the two? For example when your business produces tempe chips. Where, the raw materials are tempeh, flour, salt, pepper, and cooking oil. While the auxiliary material is oil drainer or oil tissue which helps absorb the remaining oil before it is wrapped.
Type & Characteristics
According to Gunawan Adisaputro and Marwan Asri, there are two types of raw materials namely direct raw materials and indirect raw materials. Direct raw material is a raw material that is part of the finished goods produced. Where, the costs incurred for purchasing raw materials are closely related and comparable to the finished goods produced. Meanwhile, indirect raw materials or indirect materials are raw materials that play an important role in the production process, but are not directly visible in the finished goods made.
Then what about the helper material? Well, many people think that this helper material is similar to indirect material. To distinguish the two are if the indirect material is not available, the production process can be disrupted, while without auxiliary materials, the production process can still run, but can reduce the quality of the product decreases.
For more details, the Journal will give an example, for example when your business sells and manufactures a cabinet. The direct raw material for producing cabinets is wood, while the indirect raw materials are nails and plamir used to glue the wood and paint base for the cabinets. Plamir here is used as a liquid tool that helps you close uneven wood cavities, while nails are used to assemble the cabinet, so if it is strung properly then the wood has economic value. Then what is the supporting material? Mirror becomes one of the supporting materials, where without a mirror, a cabinet can still have value, but with a mirror can make a cabinet of higher quality.
Fundamental differences in raw materials and supporting materials
From the above explanation it can be concluded that the needs and proportion of the production of raw materials is far greater than that of supporting materials. Where, without the main raw materials, the production process cannot run. Meanwhile, without supporting materials, the production process can still go according to plan, but the quality can be decreased. In addition, if the needed supporting materials are used up, you can still replace them with other supporting materials that still have the same value.
For example, when you sell tempe chip products, to drain oil in tempe, you need a paper oil helper. However, during the production, oil paper stock runs out, you can replace it with tissue or other paper.
In addition, because raw materials have a dominant portion in the use of production, costs incurred for raw materials are also more numerous. So, if the raw material prices increase, this will affect the selling price of your product also increases. This will certainly be different from the price of auxiliary materials, although the price of auxiliary goods rises, the impact is not so pronounced on the selling price of goods.
How to Manage Raw Materials & Help Materials with a Journal
By knowing the difference between the two, you can more easily determine the recording of inventory of this material into your financial records. In addition, you can also more easily determine what ingredients you need and how much quantity of goods in producing a product.
However, please note, managing stock for one product usually requires a lot of ingredients. For example, when producing cabinets, you need wood, glue, nails, paint, plamir, and much more. Do you know how many nails are used in making one cupboard? How much wood do you need to make type A cabinets? This will make it difficult for you to record the stock of goods that are owned and available. That’s why the Journal is here to help you manage your stock . Where, with the Journal, you can create a product bundling that helps record sales for a product that consists of a combination of several other products with different composition and units.