2 Saved EZ-Seat, Inc., manufactures two types of reclining chairs, Standard and Ergo. Ergo provides support for the body through a complex set of sensors and requires great care in manufacturing to avoid damage to the material and frame Standard is a conventional recliner uses standard materials, and is simpler to manufacture. EZ-Seat's results for the last fiscal year are shown in the following statement EZ SEAT, INC Income Statement Ergo Standard Total Sales revenue $3,000,000 $4,000,000 $7,000,000 Direct materials 900,000 1,200,000 2,100,000 Direct labor 600,000 400,000 1,000,000 Overhead costs Administration 500,000 Production setup 450,000 Quality control 304,000 Distribution 800,000 Operating profit $1,846,000 52 EZ Seat currently uses labor costs to allocate all overhead, but management is considering implementing an activity based costing system. After interviewing the sales and production staft management decides to allocate administrative costs on the basis of direct labor costs but to use the following bases to allocate the remaining costs Activity Level Activity Base Cost Driver Setting up Ero Standard Performing quality control Number of production runs 50 100 Number of inspections Distribution 190 190 Number of units shipped 1,700 6,100 Required: a. Complete the income statement using the preceding activity bases c. Restate the income statement for Ez Seat using direct labor costs as the only overhead allocation base Complete this question by entering your answers in the tabs below. Required A Required 28 tes Complete the income statement using the preceding activity bases. (Do not round intermediate calculations.) Account Ergo Standard Total Sales revenue $ 3,000,000 $ 4,000,000 $ 7,000,000 Direct materials $ 900,000 $ 1,200,000 $ 2,100,000 Direct labor 600.000 400,000 1,000,000 Overhead costs Administration 500,000 Production setup 450,000 Quality control 304,000 Distribution 800,000 Total overhead costs 0 Operating profit (loss) S 1,500,000 $ 2,400,000 $ 3,900,000 Required a Required C> Required A Required c Restate the income statement for EZ-Seat using direct labor costs as the only overhead intermediate calculations.) Total $ $ Account Sales revenue Direct materials Direct labor Overhead costs Operating profit (loss) Ergo Standard 3,000,000 $ 4,000,000 900,000 1.200,000 600,000 400,000 7,000,000 2.100.000 1,000,000 0 $ 1,500,000 $ 2,400,000 $ 3,900,000