Moon 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 $27 per direct labor hour. A task force headed
by Moon'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....