Compute the total direct cost and the direct cost per unit

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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.

Reference no: EM13890253

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