Difference Between Equipment and Materials

The key difference between equipment and materials is that materials form the actual product and are the parts, components, ingredients and raw materials that become a part of the product whereas equipment refers to the tools, machinery, devices that help create the product. 

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 includes manufacturing equipment and tools. In addition to equipment, capital can also be used to purchase materials that are essential for the manufacturing process.

CONTENTS

1. Overview and Key Difference
2. What is Equipment 
3. What are Materials
4. Side by Side Comparison – Equipment vs Materials in Tabular Form
5. Summary

What is Equipment

Equipment refers to 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. Many large-scale complex production facilities use expensive, technologically advanced equipment.

Figure 01: Equipment

Equipment are assets in which the business will invest. Furthermore, 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 bookkeeping activities, equipment will be depreciated so that this loss in value can be correctly documented in the accounting books of the firm.

What are 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, and fuel. They 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; thus, it may be durable or perishable in nature. There are two types of materials such as direct materials and indirect materials.

Figure 02: 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 stationery.

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. They 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 refers to tangible and durable assets that help in the production of other goods and services. Examples of equipment are things like machinery, tools, devices, etc. Materials, on the other hand, form the base of the product. This is the basic difference between equipment and materials.

Image Courtesy:

1. “634896” (CC0) via pxhere
2. “Manufacturing equipment 091” By Mixabest – Own work (CC BY-SA 3.0) via Commons Wikimedia