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 118,000 units of the Sport model and 49,000 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 one-third.

Cost Drivers and Cost Driver VolumesCenterPoint Manufacturing Facility

Activity	Cost Driver	Cost Driver Volume
		Sport	Pro	Total
Assembly building
Assembling	Machine-hours	7,800	31,800	39,600
Setting up machines	Setup hours	58	580	638
Handling material	Production runs	26	58	84
Packaging building
Inspecting and packing	Direct labor-hours	67,200	26,400	93,600
Shipping	Number of shipments	118	236	354

Third Quarter Unit Cost Report, Activity-Based CostingCenterPoint Manufacturing Facility

	Sport	Pro
Direct material	$ 1,518,000	$ 2,436,000
Direct labor
Assembly	$ 768,000	$ 636,000
Packaging	1,008,000	396,000
Total direct labor	$ 1,776,000	$ 1,032,000
Direct costs	$ 3,294,000	$ 3,468,000
Overhead
Assembly building
Assembling (@ $30 per MH)	$ 234,000	$ 954,000
Setting up machines (@ $900 per setup hour)	52,200	522,000
Handling material (@ $3,000 per run)	78,000	174,000
Packaging building
Inspecting and packing (@ $5 per direct labor-hour)	336,000	132,000
Shipping (@ $1,320 per shipment)	155,760	311,520
Total ABC overhead	$ 855,960	$ 2,093,520
Total ABC cost	$ 4,149,960	$ 5,561,520
Number of units	118,000	49,000
Unit cost	$ 35.17	$ 113.50

Required:

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