Difference Between Equipment and Materials

Equipment vs Materials
 

Factors of production are the inputs in a manufacturing process that are used for the production of various goods and services. Factors of production are defined as land, labour, capital and entrepreneurship. Capital comprises a number of inputs into a production process which also include manufacturing equipment and tools. In addition to equipment, capital can also be used to purchase materials that are essential to the manufacturing process. The article takes a closer look at two production inputs; materials and equipment, explains their significance in the production process and compares their similarities and differences.

Equipment

Equipment are tangible and durable assets that are used in the production of other goods and services. Examples of equipment are things like machinery, tools, devices, etc. Equipment is an essential input to the manufacturing process, and many large scale complex production facilities use expensive technologically advanced equipment.

Equipment are assets in which the business will invest and these assets are used over long periods of time for the purpose of making profits. Due to their prolonged use, equipment will tend to lose their value over time as a result of wear and tear. In accounting book keeping activities, equipment will be depreciated so that this loss in value can be correctly documented in the accounting books of the firm.

Materials

Materials are also an essential input to the production process, as materials form the base of the product (the basic matter from which the product is made). Materials include things like parts, components, fuel, or can even be things like sugar cane (production of sugar), tomatoes (production of sauce), and any type of material that become components of the product being manufactured. Materials used will depend on the end product that is being produced, and maybe durable or perishable in nature. Materials can be further divided into direct materials and indirect materials.

Direct materials are the materials that can be directly associated with the manufacturing of the product such as cocoa in chocolate production. Indirect materials are the materials that cannot be directly traced back to the product such as office stationary.

What is the difference between Equipment and Materials?

Equipment and materials are similar as they are both essential inputs in the manufacturing process. Materials are, however, quite distinct from equipment as materials form the actual product and are the parts, components, ingredients and raw materials that become a part of the product. Equipment, on the other hand, are the tools, machinery, devices that help create the product.

In other words, materials are molded, fixed, glued, and fastened together by the use of equipment and machinery to create the final product. Equipment are durable assets that have a long term use, whereas materials have a short term use, and may also be perishable in nature.

Summary:

Equipment vs Materials

• Equipment and materials are similar as they are both essential inputs in the manufacturing process.

• Equipment are tangible and durable assets that are used in the production of other goods and services. Examples of equipment are things like machinery, tools, devices, etc.

• Materials are also an essential input to the production process as materials form the base of the product (the basic matter from which the product is made).

• Materials maybe durable or perishable in nature, and are molded, fixed, glued, and fastened together by the use of equipment and machinery to create the final product.