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 112,000 units of J25P and 46,000 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 23 percent.

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.

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 J40X J25P $1,512,000 $2,424,000 762,000 624,000 384.000 1,002,000 $1,764,000 $1,008,000 $3,276,000 $3,432,000 204,000 924,000 372,000 42.000 30,000 132,000 126,000 324.000 144.000 288.000 744,000 $1,842,000 $4,020,000 $5,274,000 46,000 112,000 35.89 114.65