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 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 Activity Assembly building Assembling Cost Driver Volume Cost Driver Sport Pro Total Machine-hours 7,300 Setting up machines Handling material Setup hours 53 Production runs 21 31,300 530 53 38,600 583 74 Packaging building Inspecting and Direct labor- packing Shipping hours 65,200 25,400 90, 600 Number of shipments 113 226 339 Direct material Direct labor Assembly Packaging Total direct labor Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Sport Pro $1,513,000 $2,426,000 763,000 S 626,000 1,003,000 386,000 $1,766,000 $1,012,000 Direct costs $3,279,000 $3,438,000 Overhead Assembly building Assembling (8 $30 per MH) S219,000 S 939,000 Setting up machine (@ $900 per setup hour) 47,700 477,000 Handling material (8 $3,000 per run) 63,000 159,000 Packaging building Inspecting and packing (8 $5 per direct labor-hour) 326,000 127,000 Shipping (@ $1,320 per shipment) 149,160 298,320 Total ABC overhead English (United States 804,860 52.000,320 42 words B