Review the Decision Case - (Harris Systems) Answer the four case questions in the Requirements section of the case.
1. Compute the product cost per Unit for each job, using the original costing system (with two direct cost categories and a single overhead allocation rate).
2. Suppose Harris Systems adopts the ABC system, Compute the product cost per unit for each job using ABC.
3. Which costing system more accurately assigns to jobs the cots of the resources consumed to produce them? Explain.
4. A dependable company has offered to produce both jobs for Harris for $5,400 per output unit. Harris may outsource (buy from the outside company) either Job A only, Job B only, or both jobs. Which course of action will Harris's managers take if they base their decision on (a) the original system? (b) ABC system costs? Which course of action will yield more income? Explain.