1 16.66 points Skipped eBook After reviewing the new activity-based costing system that Nancy Chen has implemented at IVC's CenterPoint manufacturing facility. Tom Spencer, the production supervisor, believes that he can reduce production costs by reducing the time spent on machine setups. He has spent the last month working with employees in the plant to change over the machines more quickly with the same reliability He plans to produce 113,000 units of the Sport model and 46,500 units of the Pro model in the first quarter. He believes that with his more efficient setup routine, he can reduce the number of setup hours for both the Sport and the Pro products by 22 percent. Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Activity Assembly building Assembling Setting up machines Handling material Packaging building Inspecting and packing Shipping Cost Driver Sport Cost Driver Volume Pro Total Machine-hours 7,300 Setup hours Production runs 53 21 31,300 530 53 30,600 583 74 Direct labor-hours 65,200 Number of shipments 113 25,400 226 90,600 339 Mc Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Direct material Direct labor Assembly Packaging. Total direct labor Direct costs Sport $1,513,000 $763,000 1,003,000 $1,766,000 $3,279,000 Pro $2,426,000 $ 626,000 385,000 $1,012,000 $1,438,000 Overhead Assembly building Assembling ($30 per 1) $219,000 $539,000 Setting up machine ( $900 per setup hour) 47,700 477,000 Handling material ($3,000 per run) 63,000 159,000 Packaging building Inspecting and packing (8 $5 per direct labor-hour) 125,000 127,000 Shipping ( $1,320 per shipment) 149,160 290,330 Total ABC overhead $2,000,320 Total ABC cost Number of units Unit cost $ $4,083,800 113,000 36.14 $5,438,320 80599 $ 116.95 Required: a. Compute the amount of overhead allocated to the Sport and the Pro drones for the first quarter using activity-based costing Assume that all events are the same in the first quarter as in the third quarter except for the number of setup hours. Assume the cost of a setup hour remains at $900 Model Total ABC