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 101,000 units of J25P and 40,500 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 26 percent.

After reviewing the new activity-based costing system that Janis McGee has implemented at Joplin Industries's 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 101,000 units of J25P and 40,500 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 26 percent. J25P J40X Direct material $1,501,000 $2,402,000 Direct labor 751,000 602,000 Assembly Packaging 991,000 362,000 Total direct labor $1.742.000 964,000 Direct costs $3,243,000 $3,366,000 Overhead Assembly building 182,000 902,000 Assembling $30 per mh) Setting up machine $900 per setup hour) 36,500 361,000 Handling material (@$3,000 per run) 24,500 121,000 Packaging building 302,000 Inspecting and Packing S5 per direct labor-hour) 115,000 266,000 Shipping $1,320 per shipment) 133.000 Total ABC overhead 678,000 $1,765,000 $3,921,000 $5,131,000 Total ABC cost Number of units 101,000 40,500 Unit cost 38.82 26.69 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. Total ABC overhead J25P J40X