Exercise 9-33 (Static) Activity-Based Costing (LO 9-4, 5) After reviewing the new activity-based costing system that Nancy Chen has implemented at IVC's CenterPoint manufacturing facility Tom Spencer, the production supervisor, belleves 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 100,000 units of the Sport model and 40,000 units of the Pro model in the first quarter. He believes that with has 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 Volumes-CenterPoint Manufacturing Facility Activity Cost Driver Sport Cost Driver Volume Pro Total Assembly building Assembling Setting up machines ces Handling material Packaging building Inspecting and packing Shipping Machine-hours Setup hours 6,000 40 Production runs 30,000 400 40 36,000 440 48 Direct labor-hours 60,000 Number of shipments 100 22,800 200 $2,000 300 Third Quaner Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Direct material Direct labor Assembly Packaging Total direct labor Direct costs Overhead Assembly building Assembling ( $30 per 194) Setting up machines ( 5900 per setup hour) Handling material (@ $3,000 per run) Packaging building Inspecting and packing (@ $5 per direct labor-hour) Shipping (P $1,320 per shipment) Total ABC overhead Total Alc cost Number of units Sport $1,500,000 $750,000 990,000 $1,740,000 $ 3,240,000 Pro $ 2,400,000 $ 600,000 360,000 $960,000 $ 3,360,000 $ 180,000 36,000 24,000 300,000 132,000 $900,000 360,000 120,000 114,000 264,000 $ 672,000 $ 1,758,000 $ 3,912,000 100,000 $ 39.32 $ 5,118,000 40,000 $127.95 Unit cost Required: 6. 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