The book used for this assignment is Kimmell, P.D., Weygandt, J.J., Kieso, D.E., Accounting: Tools for Business Decision Making. 6th Edition. Wiley 2015.
Instructions for Memo:
Write a 250- 300 word memo about the following situation.
Memo- 2
Mr. Profit is the owner of a metal fabrication company. They order bulk metal, fabricate and construct metal rails for steps and safety applications.
Mr. Profit has just returned from a meeting with his banker, Mr. Money. He was denied a loan to purchase new fabrication equipment for the business.
Required:
As the new managerial accountant, Mr. Profit does not understand the differences between Direct Materials, and Manufacturing Overhead. Explain these to Mr. Profit.
You are to write a word memo to explain the differences.
What types of Direct Materials would be used in this business?
What are examples of the Manufacturing Overhead for this business?
2. Give 2-3 examples of reporting and how it could be useful to approach the banker to get the loan approved?
