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.