funz company which produces wooden toys is about to adopt a lean operating environme 544635

Direct and Indirect Costs in Lean and Traditional Manufacturing Environments

Funz Company, which produces wooden toys, is about to adopt a lean operating environment. In anticipation of the change, Letty Hernandez, Funz’s controller, prepared the following list of costs for December:

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 environment.

3. Assume that the costs incurred in the lean 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.