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 104,000 units of the Sport model and 42,000 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 29 percent. Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Activity Cost Driver Sport Cost Driver Volume Pro Total Assembly building Assembling Machine-hours 6,400 Setting up machines Setup hours Handling material. Packaging building Production runs 44. 12 30,400 440 44 36,800 484 56 Inspecting and packing Shipping Direct labor-hours 61,600 Number of shipments 104 23,600 208 85,200 312 Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Direct material Sport $1,504,000 Pro $2,408,000 Direct labor Assembly Packaging Total direct labor Direct costs Overhead. Assembly building $ 754,000 994,000 $1,748,000 $3,252,000 $ 192,000 39,600 $ 608,000 368,000 $ 976,000 $3,384,000 $ 912,000 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 396,000 36,000 132,000 308,000 118,000. 137,280 274,560 $1,832,560 $ 712,880 $3,964,880 $ 104,000 $5,216,560 38.12 $ 42,000 124.20