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Review the Decision Case 1 (Harris Systems) in the following paragraphs. Answer the four case questions in the Requirements section of the case. In addition, address the following in one to two paragraphs:
Respond to each directive or question in 1-2 paragraphs. Apply current APA standards for writing style to your work.
Case 1. Harris System specializes in servers for workgroup, e-commerce, and ERP appliances. The company's original job costing system has two direct cost categories; direct materials and direct labor. Overhead is allocated to jobs at the single rate of $22 per direct labor hour. A task force headed by Harris's CFO recently designed an ABC system with four activities. The ABC system retains the current system's two different cost categories. Thus, it budgets only overhead costs for each activity. Pertinent data follow:
Activity
Allocation Base
Cost Allocation Rate
Materials Handling
Number of parts
$0.85
Machine setup
Number of setups
500.00
Assembling
Assembling hours
80.00
Shipping
Number of shipments
1,500.00
Harris Systems has been awarded two new contracts, which will be produced as Job A and Job B. Budget data relating to the contracts follow:
Job A
Job B
15,000
2,000
6
4
Number of assembly hours
1,500
200
1
Total direct labor hours
8,000
600
Number of output units
100
10
Direct material cost
$220,000
$30,000
Direct labor cost
$160,000
$12,000
Requirements
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