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1. Describe the main difference between direct materials and indirect materials that are used in any given production process. 2. The Cheepencheerful Bakery Company produces

1. Describe the main difference between direct materials and indirect materials that are used in any given production process.

2. The Cheepencheerful Bakery Company produces muffins that it sells to hotel chains in the city. It generally breaks even at the end of the year but not always. It only knows this when the companys external accountants prepare financial statements that are used by the bank and to file tax returns. The company does its best to keep its costs down and as a result does not pay its employees very much. When the presidents wife, who is the bookkeeper, decided to retire, the president advertised for her replacement. He felt he could find someone who would work for slightly more than minimum wage. This would be in line with his desire to keep costs down. Comment on the presidents desire to keep his costs down by hiring a poorly paid accountant for his organization.

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