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 setup He has spent the last month working with employees in the plant to change over the machines more quickly with the same reliabilit He plans to produce 113,000 units of the Sport model and 46,500 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 22 percent. Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Cost Driver Volume Activity Cost Driver Sport Pro Total Assembly building. Assembling Setting up machines Machine-hours) Setup hours 7,300 53 Handling material Production runs 21 31,300 530 53 38,600 583 74 Packaging building Inspecting and packing, Shipping Direct labor-hours Number of shipments 65,200 113 25,400 226 90,600 339 Third Quarter Unit Cost Report. Activity-Based Costing-CenterPoint Manufacturing Facility Direct material Direct labor Assembly Packaging Total direct labori Direct costs Overhead Assembly building Assembling (@ $30 per MH) Setting up machine (8 5900 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: Sport $1,513,000 Pra $2,426,000 $1,766,000 $3,279,000 $ 763,000 1,003,000 $ 626,000 386,000 $1,012,000 $3,438,000 $ 219,000 939,000 47,700 477,000 63,000 159,000 326,000 127,000 149,160 298,320 $ 804,860 $2,000,320 $4.083.860 $5,438,320