Mr. Profit is the owner of a metal fabrication company. They order bulk sheet metal, fabricate and construct metal washers using production equipment to press out the washers.

Mr. Profit has just hired you as the new cost accountant for the company. He was denied a loan to purchase new fabrication equipment for the business.

As the new cost accountant, Mr. Profit does not understand the differences between Direct Materials and Manufacturing Overhead.

What are Direct Materials? What is Manufacturing Overhead? What types of Direct Materials and manufacturing overhead would be used in this business?

Give 2 examples of Cost savings and accounting tips to Mr. Profit.

(these should be production based and improve net profit.)