Pro Systems specializes in servers for work-group, e-commerce, and enterprise resource planning (ERP) applications. The company's original job cost system has two direct cost categories: direct materials and direct labor. Overhead is allocated to jobs at the single rate of $ 20 per direct labor hour. A task force headed by Pro's CFO recently designed an ABC system with four activities. The ABC system retains the current system's two direct 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 setup 500
Assembling Assembling hours 80
Shipping Number of shipment 1,500

Pro systems has been awarded two new contracts, which will be produced as Job A and B. Budget data relating to the contract follow:

Job A Job B
number of parts 15,000 2,000
number of setups 6 4
number of assembling hours 1,500 200
number of shipments 1 1
total direct labor hour 8,000 600
number of output units 100 10
direct materials cost 220,000 30,000
direct labor cost 160,000 12,000

Requirement:
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 cost per unit for each job using ABC.
3. which costing system more accurate assigns to jobs the costs of the resource consumed to produce them?Explain.
4. A dependable company has offered to produce both jobs for Harris for $5,400 per output units. Harris may outsource(but from the outside company)either Job A only, Job B only, or both job. which course of action will Pro'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.