hection.com 3 10 onts After reviewing the new activity-based costing system that Nancy Chen has implemented at VC'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 reability He plans to produce 104,000 units of the Sport model and 42,000 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 29 percent Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Cost Driver Volunte Activity Cost Oriver Sport Pro Assembly building Total Assembling Machine-hours 6,400 30,400 36,800 Setting up inachines Setup hours 44 440 484 Handling material Production runs 12 Packaging building Inspecting and packing Direct labor-hours 61.600 23,600 R5,200 Shipping Nunber of shipnents 104 200 312 Skope 44 56 loo p Print Third Quarter Unit Cost Report, Activity Based Costing-CenterPoint Manufacturing Facility Sport Pro Direct ateriat $1,504.000 52,400.000 Direct labor Assembly $ 754,000 $ 608,000 Packaging 994 000 358,000 Total direct Labor 33748,000 5976000 Direct costs 33.252.000 13,386, Overhead Assembly building Assembling (e $30 per ) $ 192,00 $912,000 Setting up machine ($900 per setup hour 39,660 396,000 Handling material le $3,000 per run) 36,000 132,000 Packaging building Inspecting and packing (@$5 per direct labor-hour) 388,000 118,000 Shipping e $1.320 per shiprent) 137,280 274,560 Total ABC overhead 57112.80 51,832,560 Total ABC cost $3,964,880 $5,216,560 Number of units 1044,000 42,000 Unit cost 5 38.12 $ 124.20 30 po MINH H NAM | | | | | | | | | | Sport Pro Direct material 514504,000 $2.000.000 Direct labor Assembly $ 754,000 $ 600,000 Packaging 994.000 368.000 Total direct labor 25,000 S976,000 Direct costs 90 14,000 Overhead Assembly building Assembling { $30 per ) 5192,000 $912,000 Setting up machine ($900 per setup hour) 39,600 395,000 Handling saterial to $3.000 per run) 36,000 132,600 Packaging building Inspecting and packing ( 55 per direct labor-hour) 385,000 118,000 Shipping (51.320 per shipment) 137,280 274.560 Total ABC overhead 22,880 132560 Total ABC cost $3,964,880 $5,216.560 Number of units 104,600 42,00 Unit cost 5 38.12 $124.20 Perences 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 asetup hour remains at $900. Total ADG Ows Model Sport Pro
