1). Identify each cost above as direct or indirect, assuming that it was incurred in a traditional manufacturing setting.

2). Identify each cost above 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 5,000 1-pound bags of coffee during the month. Compute the total direct cost and the direct cost per unit for the bags produced. Please carry unit cost to 2 decimal places.

Peralto Company, which processes coffee beans into ground coffee, is about to adopt a JIT operating environment. In anticipation of the change, Peralto's controller prepared the following list of costs for the month Coffee beans Bags Small tools Depreciation-plant Depreciation-grinder Direct labor Indirect labor Labels Materials handling $5,000 100 80 400 200 1,000 300 20 75 Insurance-plant President's salary Engineering labor Utilities Building occupancy S300 4,000 1,700 1,250 1,940 400 205 120 500 Supervision Operating supplies Repairs and maintenance Employee benefits