Funz Company, which produces wooden toys, is about to adopt a JIT operating environment. In anticipation of the change, Letty Hernando, 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 just-in-time (JIT) environment.
3. Assume that the costs incurred in the JIT 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.

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Wood Bolts Small tools Depreciation, plant Depreciation, machinery Direct labor Indirect labor Purchased parts Materials handling $3,200 Insurance, plant S 324 4,000 2,700 1,250 1,740 2,686 254 198 2,654 32 President's salary 54 Engineering labor 450 Utilities 275 Building occupancy 2,675 Supervision 890 Operating supplies 58 Repairs and maintenance 74 Employee benefits