This video discusses Direct Materials.

Direct Materials are the physical inputs that are incorporated into a manufacturing company’s final product AND are directly traceable to the final product. The traceability feature is important, as there are two types of raw materials: direct and indirect. The steel used to build a car would be a Direct Material since it is included in the final product and is clearly traceable to the final product. Grease used while installing the car’s various components isn’t directly traceable to the car and would be considered an Indirect Material (part of Manufacturing Overhead). Thus, a key takeaway is that the terms “Direct Materials” and “Raw Materials” do NOT mean the exact same thing.