1 After reviewing the new activity-based costing system that Nancy Chen has implemented at IVC's Center Point 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 108,000 units of the Sport model and 44,000 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 33 percent. 2 points eBook Print References Cost Drivers and Cost Driver Volumes-Center Point Manufacturing Facility Cost Driver Volume Activity Cost Driver Sport Pro Total Assembly building Assembling Machine-hours 6,800 30,800 37,600 Setting up machines Setup hours 48 480 528 Handling material Production runs 16 48 64 Packaging building Inspecting and packing Direct labor-hours 63,200 24,400 87,600 Shipping Number of shipments 108 216 324 1 2 points vv v, - - Sport Pro Direct material $1,508,000 $2,416,000 Direct labor Assembly $ 758,000 $ 616,000 Packaging 998,000 376,000 Total direct labor $1,756,000 $ 992,000 Direct costs $3,264,000 $3,408,000 Overhead Assembly building Assembling (@$30 per MH) $ 204,000 $ 924,000 Setting up machine (@ $900 per setup hour) 43,200 432,000 Handling material (@ $3,000 per run) 48,000 144,000 Packaging building Inspecting and packing (@ $5 per direct labor-hour) 316,000 122,000 Shipping @ $1,320 per shipment) 142,560 285,120 Total ABC overhead $ 753, 760 $1,907,120 Total ABC cost $4,017,760 $5,315,120 Number of units 108,000 44,000 Unit cost $ 37.20 $ 120.80 eBook Print References 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