The correct answer is D. Indirect material costs.
Direct material costs are the costs of materials that are directly and physically identifiable with the finished product. They can be easily traced to the finished product and are included in the cost of goods sold. Examples of direct material costs include the cost of raw materials, the cost of purchased parts, and the cost of packaging materials.
Indirect material costs are the costs of materials that are not directly and physically identifiable with the finished product. They cannot be easily traced to the finished product and are not included in the cost of goods sold. Examples of indirect material costs include the cost of cleaning supplies, the cost of lubricants, and the cost of office supplies.
Inward delivery charges and custom duties are classified as indirect material costs because they are not directly and physically identifiable with the finished product. They cannot be easily traced to the finished product and are not included in the cost of goods sold.