Reference no: EM13890253

Zunz Company, a producer of wooden toys, is about to adopt a lean operating envi- ronment. In anticipation of the change, Zunz's controller prepared the following list of costs for December:

Wood	$1,200	Insurance-plant	$324
Bolts	32	President's salary	4,000
Small tools	54	Engineering labor	2,700
Depreciation-plant	450	Utilities	1,250
Depreciation-machinery	275	Building occupancy	1,740
Direct labor	2,675	Supervision	2,686
Indirect labor	890	Operating supplies	254
Purchased parts	58	Repairs and Maintenance	198
Materials handling	74	Employee benefits	2,654

Required:

1. Identify each cost as direct or indirect, assuming that it was incurred in a traditional manufacturing setting.

2. Identify each cost as direct or indirect, assuming that it was incurred in a lean oper- ating environment.

3. Assume that the costs incurred in the lean operating environment are for a work cell that completed 1,250 toy cars in December. Compute the total direct cost and the direct cost per unit for the cars produced.