The cost categories in the following list are typical of
The cost categories in the following list are typical of many manufacturing operations:
a. Direct materials:
(1) Sheet steel
(2) Iron castings
b. Assembly parts:
(1) Part 24
(2) Part 15
c. Direct labor
d. Engineering labor
e. Indirect labor
f. Operating supplies
g. Small tools
h. Depreciation—plant
i. Depreciation—machinery
j. Supervisory salaries
k. Electrical power
l. Insurance and taxes—plant
m. President’s salary
n. Employee benefits
Identify each cost as direct or indirect, assuming that it was incurred in
(1) A traditional manufacturing setting
(2) A JIT environment.

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