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 17 percent. Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Cost Driver Volume Activity Cost Driver Sport Pro Total Assembly building Assembling Machine-hours 7,800 31,800 39,600 Setting up machines Setup hours 58 58 638 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 Costing-CenterPoint 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 machine (@ $900 per setup hour) 52.2ee 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 $4,149,96 $5,561,520 Number of units 118,000 49,000 Unit cost $ 35.17 $ 113.50 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