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After revlewing the new actlvity-based costing system that Nancy Chen has Implemented at IVC's CenterPoint...

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Accounting

After revlewing the new actlvity-based 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 rellability. He plans to produce 100,000 units of the Sport model and 40,000 units 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 one-third.
Cost Drlvers and Cost Driver Volumes-CenterPoint Manufacturing Facility
\table[[,,Cost Driver volume],[Activity,Cost Driver,Sport,Pro,Total],[Assembly building,,6,000,30,000,36,000],[Assembling,Machine-hours,40,400,440],[Setting up machines,Setup hours,8,40,48],[Handling material,Production runs,60,000,22,800,82,800],[Packaging building,Direct labor-hours,100,200,300],[Inspecting and packing,Number of shipments,,,]]
Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility
\table[[,Sport,Pro],[Direct material,$1,500,000,$2,400,000
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