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 117,000 units of the Sport model and 48,500 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 18 percent. Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Cost Driver Volume Activity Cost Driver Sport Pro Total Assembly building Assembling Machine-hours 7,700 31,700 39,400 Setting up machines Setup hours 570 627 Handling material Production runs 57 - 82 Packaging building Inspecting and packing Direct labor-hours 66,800 26,200 93,000 Shipping Number of shipments 117 234 351 57 25 Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Sport Pro Direct material $1,517,000 $2,434,000 Direct labor Assembly $ 767,000 $ 634,000 Packaging 1,007,000 394,000 Total direct labor $1,774,000 $1,028,000 Direct costs $3,291,000 $3,462,000 Overhead Assembly building Assembling ($30 per MH) $ 231,000 $ 951,000 Setting up machine (@ $900 per setup hour) 51,300 513,000 Handling material (& $3,000 per run) 75,000 171,000 Packaging building Inspecting and packing (@ $5 per direct labor-hour) 334,000 131,000 Shipping (@ $1,320 per shipment) 154,440 308,880 Total ABC overhead $ 845,740 $2,074,880 Total ABC cost $4,136, 740 $5,536,880 Number of units 117,000 48,500 Unit cost $ 35.36 $ 114.16 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