3 421 oints eBook Print References After reviewing the new activity-based costing system that Nancy Chen has Implemented at IVC's CenterPoint manufacturing facility. Tom Spencer, the production supervisor, belleves 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 109,000 units of the Sport model and 44,500 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 34 percent Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Activity Assembly building Assembling Cost Driver Sport Cost Driver Volume Pro Total Machine-hours 6,900 Setup hours 49 10,900 490 37,800 539 Production runs 17 49 66 Inspecting and packing Shipping Direct labor-hours Number of shipments- 63,600 109 24,600 238 88,200 327 Setting up sachines Handling material Packaging building 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 1) Setting up machine ( 5900 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 $1,509,000 Pro $2,418,000 $ 759,000 999,000 $1,750,000 $3,267,000 378,000 $996,000 13,414,000 $207,000 $ 927,000 44,100 441,000 51,000 147,000 118,000 123,000 287,760 $763,980 $1,925,760 $4,030,980 $5,339,760 109,000 36.98 44,508 $ 119.99 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 Overhead Sport Pro