After reviewing the new activitybased 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 units of the Sport model and 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 onethird.
Cost Drivers and Cost Driver VolumesCenterPoint Manufacturing Facility
Third Quarter Unit Cost Report, ActivityBased CostingCenterPoint Manufacturing Facility
Required:
a Compute the amount of overhead allocated to the Sport and the Pro drones for the first quarter using activitybased 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 $
