After reviewing the new activity-based costing system that Janis McGee has implemented at Joplin Industriess Port Arthur manufacturing facility, Kris Kristoff, 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 100,000 units of J25P and 40,000 units of J40X in the first quarter. He believes that with his more efficient setup routine, he can reduce the number of setup hours for both the J25P and the J40X products by 25 percent.

J25P J40X

Direct material $ 1,500,000 $ 2,400,000

Direct labor Assembly $ 750,000 $ 600,000

Packaging 990,000 360,000

Total direct labor $ 1,740,000 $ 960,000

Direct costs $ 3,240,000 $ 3,360,000

Overhead Assembly building Assembling (@ $30 per mh) $ 180,000 $ 900,000

Setting up machine (@ $900 per setup hour) 36,000 360,000

Handling material (@ $3,000 per run) 24,000 120,000

Packaging building Inspecting and Packing (@ $5 per direct labor-hour) 300,000 114,000

Shipping (@ $1,320 per shipment) 132,000 264,000

Total ABC overhead $ 672,000 $ 1,758,000

Total ABC cost $ 3,912,000 $ 5,118,000

Number of units 100,000 40,000

Unit cost $ 39.12 $ 127.95

Required: Compute the amount of overhead allocated to the J25P and the J40X cameras 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.