10 3 points 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 108,000 units of the Sport model and 44,000 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 33 percent. Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Activity Cost Driver Sport Cost Driver Volume Pro Total Assembly building Assembling Machine-hours Setting up machines Setup hours Handling material Packaging building Inspecting and packing Shipping Production runs 6,800 48 16 30,800 480 48 37,600 528 64 Direct labor-hours Number of shipments 63,200 108 24,400 216 87,600 324 Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Direct material Direct labor Assembly Packaging Total direct labor Direct costs Overhead Assembly building Assembling (@ $30 per MH) Setting up machine (@ $900 per setup hour) Handling material (@ $3,000 per run) Packaging building Inspecting and packing (@ $5 per direct labor-hour) Shipping (@ $1,320 per shipment) Total ABC overhead Total ABC cost Number of units Unit cost Sport $1,508,000 Pro $2,416,000 $ 758,000 998,000 $1,756,000 $3,264,000 $ 616,000 376,000 $ 992,000 $3,408,000 48,000 $ 204,000 43,200 $ 924,000 432,000 144,000 316,000 122,000 142,560 285,120 $ 753,760 $1,907,120 $4,017,760 $5,315,120 $ 108,000 37.20 $ 44,000 120.80 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. Answer is complete but not entirely correct. Total ABC Overhead Model Sport $ 739,444 Pro $ 1,764,560