Solution-Compute the total direct cost for the bags produced

Compute the total direct cost for the bags produced

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Reference no: EM13890275

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	$5,000	Insurance-plant	$ 300
Bags	100	President's salary	4,000
Small tools	80	Engineering labor	1,700
Depreciation-plant	400	Utilities	1,250
Depreciation-grinder	200	Building occupancy	1,940
Direct labor	1,000	Supervision	400
Indirect labor	300	Operating supplies	205
Labels	20	Repairs and maintenance	120
Materials handling	75	Employee benefits	500

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 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. (Carry unit cost to two decimal places.)

Reference no: EM13890275

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Compute the total direct cost for the bags produced

Reference no: EM13890275

Reference no: EM13890275

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