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After revlewing the new actlvity-based costing system that Nancy Chen has Implemented at IVC's CenterPoInt manufacturing facillty, Tom Spencer, the production supervisor, believes that he
After revlewing the new actlvity-based costing system that Nancy Chen has Implemented at IVC's CenterPoInt manufacturing facillty, 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 qulckly with the same rellability. He plans to produce 114,000 unlts of the Sport model and 47,000 unlts of the Pro model in the first quarter. He belleves that with his more efficlent setup routine, he can reduce the number of setup hours for both the Sport and the Pro products by 21 percent. Cost Drlvers and Cost Driver Volumes-CenterPolnt Manufacturina Facilitv Third Quarter Unit Cost Report, Actlvity-Based Costing-CenterPoint Manufacturing Facillty Required: a. Compute the amount of overhead allocated to the Sport and the Pro drones for the first quarter using actlvity-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
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