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 110,000 units of the Sport model and 45,000 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 35 percent. Cost Drivers and Cost Driver VolumesCenterPoint Manufacturing Facility Cost Driver Volume Activity Cost Driver Sport Pro Total Assembly building Assembling Machine-hours 7,000 31,000 38,000 Setting up machines Setup hours 50 500 550 Handling material Production runs 18 50 68 Packaging building Inspecting and packing Direct labor-hours 64,000 24,800 88,800 Shipping Nmber of shipments 110 220 330 Third Quarter Unit Cost Report, Activity-Based CostingCenterPoint Manufacturing Facility Sport Pro Direct material $1,510,000 $2,420,000 Direct labor Assembly $ 760,000 Packaging 1,000,000 Total direct labor $1,760,000 Direct costs $3,270,000 Overhead Assembly building Assembling (@ $30 per MH) $ 210,000 Setting up machine (@$900 per setup hour) 45,000 Handling material (@ $3,000 per run) 54,000 Packaging building Inspecting and packing (@$5 per direct labor-hour) 320,000 Shipping (@ $1,320 per shipment) 145,200 Total ABC overhead $ 774,200 Total ABC cost $4,044,200 Number of units 110,000 Unit cost $ 36.77 $ 620,000 380,000 $1,000,000 $3,420,000 $ 930,000 450,000 150,000 124,000 290,400 $1,944,400 $5,364,400 45,000 $ 119.21 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.