To remain competitive, Harris Systems’ management believes the company must produce Job B-type servers (from Decision Case) at a target cost of $5,400. Harris Systems has just joined a B2B e-market site that management believes will enable the firm to cut direct materials costs by 10%. Harris’s management also believes that a value engineering team can reduce assembly time.
Requirement
1. Compute the assembling cost savings per Job B-type server required to meet the $5,400 target cost. (Hint: Begin by calculating the direct materials, direct labor, and allocated activity costs per server.)
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