Tangible products

Definition

Tangible products are physical items that can be touched, seen, and measured. These products are produced by manufacturing or merchandising organizations and include goods like electronics, clothing, and furniture.

5 Must Know Facts For Your Next Test

1. Tangible products have a physical presence, differentiating them from services which are intangible.
2. These products often involve direct materials, direct labor, and manufacturing overhead costs in their production.
3. Inventory management is crucial for tangible products to avoid overproduction or stockouts.
4. In managerial accounting, the costs associated with tangible products are classified into variable costs and fixed costs.
5. Quality control and assurance processes are essential for maintaining the standards of tangible products.

Review Questions

• What distinguishes tangible products from services?
• Name three cost components involved in the production of tangible products.
• Why is inventory management important for companies dealing with tangible products?

Related terms

Direct Materials:

Raw materials that can be physically and directly associated with the finished product during the manufacturing process.

Variable Costs:

Costs that vary directly with the level of production output.

Fixed Costs:

Costs that remain constant regardless of the level of production or sales volume.