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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

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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 117,000 units of the Sport model and 48,500 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 18 percent Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Cont Driver Volume Activity Cost Driver Sport Pro Total Assembly building Assembling Machine-hours 7,700 31,700 39,400 Setting up machines Setup hours 570 627 Handling material Production runn 82 Packaging building Inspecting and packing Direct labor-hours 66,800 26,200 93,000 Shipping Number of shipments 117 234 57 25 57 351 Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Sport Pro Direct material $1,517,000 $2,434,000 Direct labor Assembly $ 767,000 $ 634,000 Packaging 1,002,000 394,000 Total direct labor $1,774,000 $1,028,000 Direct costs $3.291,000 $3,462,000 Overhead Assembly building Assembling te $30 per M) $ 231,000 $951,000 Setting up nachine (# $900 per setup hour) 51,300 513,000 Handling material (# $3,000 per run) 75,000 171,000 Packaging building Inspecting and packing $5 per direct labor-hour) 334,000 131.000 Shipping ( $1,320 per shipment) 154,440 303,880 Total ABC overhead $ 845, 740 $2,074,680 Total and cost $4, 136,740 $5.536,880 Number of units 117,000 48,500 Unit cost $ 35.36 $ 114.16 Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Sport Pro Direct material $1,517,000 $2,434,000 Direct labor Assembly $ 767,000 634,000 Packaging 1.007.000 394,000 Total direct labor $1,774,000 $1,028,000 Direct conta $3,291,000 $3,462,000 Overhead Assembly building Assembling ($30 per MI) $ 231,000 $ 951,000 Setting up machine e $900 per setup hour) 51,300 513,000 Handling material (e $3,000 per run) 75.000 171.000 Packaging building Inspecting and packing ( $5 per direct labor-hour) 334,000 131,000 Shipping (e $1,320 per shipment) 154,449 308.000 Total ABC overhead S845,740 $2,074,800 Total and cost $4,136,740 $5,536,880 Number of units 117,000 48,500 Unit cost $ 35.36 5 114.16 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. Model Total ABC Overhead Sport Pro Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company's two versions of a special reel used for river fishing. The two models are the M-008, a basic reel, and the M-123, a new and improved version. Cost accountants at company headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned. The cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a response to headquarters. Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $266,400. During that time, the company produced 10,400 units of the M-008 and 2,500 units of the M-123. The direct costs of production were as follows. M-008 M-123 Direct materials $83,200 $100,000 Direct labor 83,200 50,000 Total $183,200 133,200 Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows Cost Driver Number of machine-hours Number of production runs Number of inspections Total overhead Costs $ 93,900 80,000 92.500 $266,400 Activity level M-008 M-123 1.000 9,000 10 30 20 30 Total 10,000 40 50 Required: a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product? Complete this question by entering your answers in the tabs below. per unit produced for each product? Complete this question by entering your answers in the tabs below. Required A Required B How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is cost per unit produced for each product? (Round "Total unit cost" to 2 decimal places.) M-008 M-123 Total overhead Total unit cost

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