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 106,000 units of the Sport model and 43,000 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 31 percent Cost Drivers and Cost Driver Volumes-Center Point Manufacturing Facility Cost Driver Volume Activity Assembly building Assembling Cost Driver Total Sport Pro 30,600 Machine-hours 6,600 46 37,200 Setting up machines Handling material Packaging building Inspecting and packing Shipping Setup hours Production runs 460 506 14 46 60 Direct labor-hours 86,400 62,400 24,000 Number of shipments 212 318 106 Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Sport $1,506,000 Pro Direct material $2,412,000 Direct labor Assembly Packaging $ 756,000 612,000 372,000 $ 984,000 $3,396,000 996,000 $1,752,000 $3,258,000 Total direct labor Direct costs Overhead Assembly building Assembling (e $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) $ 198,000 918,000 41,400 414,000 42,000 138,000 312,000 120,000 139,920 279,840 $1,869,840 733,320 Total ABC overhead Total ABC cost $3,991,320 $5,265,840 43,000 Number of units 106,000 $ Unit cost 37.65 122.46 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. Total ABC Overhead Model Sport Pro 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 106,000 units of the Sport model and 43,000 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 31 percent Cost Drivers and Cost Driver Volumes-Center Point Manufacturing Facility Cost Driver Volume Activity Assembly building Assembling Cost Driver Total Sport Pro 30,600 Machine-hours 6,600 46 37,200 Setting up machines Handling material Packaging building Inspecting and packing Shipping Setup hours Production runs 460 506 14 46 60 Direct labor-hours 86,400 62,400 24,000 Number of shipments 212 318 106 Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Sport $1,506,000 Pro Direct material $2,412,000 Direct labor Assembly Packaging $ 756,000 612,000 372,000 $ 984,000 $3,396,000 996,000 $1,752,000 $3,258,000 Total direct labor Direct costs Overhead Assembly building Assembling (e $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) $ 198,000 918,000 41,400 414,000 42,000 138,000 312,000 120,000 139,920 279,840 $1,869,840 733,320 Total ABC overhead Total ABC cost $3,991,320 $5,265,840 43,000 Number of units 106,000 $ Unit cost 37.65 122.46 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. Total ABC Overhead Model Sport Pro