Commonwealth Devices makes three wearable fitness devices at its Lake Plant: CFit-1, CFit-2, and CFit-Xtra. The company has for many years allocated overhead to products using machine-hours. Last year, the Lake Plant produced and shipped 8,080 units of CFit-1, 14,240 units of CFit-2, and 8,080 units of CFit-Xtra. The plant recorded the following revenues and costs:

COMMONWEALTH DEVICES
Lake Plant
Income Statement
	CFit-1	CFit-2	CFit-Xtra	Total
Sales revenue	$ 888,800	$ 1,424,000	$ 1,212,000	$ 3,524,800
Direct costs
Direct materials	200,000	288,000	248,000	736,000
Direct labor	48,000	60,500	128,000	236,500
Variable overhead
Machine setup				200,000
Order processing				152,000
Materials handling				200,000
Machining				104,000
Shipping				84,000
Contribution margin				$ 1,812,300
Plant administration costs				1,408,000
Gross profit				$ 404,300

The Lake Plant has put together an employee team to recommend a possible activity-based cost system, including cost allocation bases. The employee team recommends the following:

Activity	Cost Driver	CFit-1	CFit-2	CFit-Xtra
Machine setup	Setups	80	160	160
Order processing	Orders received	9	20	11
Materials handling	Material movements	3,000	4,500	5,000
Machining	Machine-hours	10,000	16,000	24,000
Shipping	Units shipped	8,000	14,000	8,000

The employee team further recommends that administration costs not be allocated to products.

Required:

a. Using machine-hours to allocate overhead, complete the income statement for the Lake Plant. Do not allocate administrative costs to products.

b-1. Compute the cost driver rates.

b-2. Complete the income statement using the activity-based costing method suggested by the employee team.

Using machine-hours to allocate overhead, complete the income statement for the Lake Plant. Do not allocate administrative costs to products.

Note: Do not round your intermediate calculations. Input all amounts as positive values.

COMMONWEALTH DEVICES
Lake Plant
Income Statement
	CFit-1	CFit-2	CFit-Xtra	Total
Sales revenue	$888,800	$1,424,000	$1,212,000	$3,524,800
Direct costs:
Direct material	200,000	288,000	248,000	736,000
Direct labor	48,000	60,500	128,000	236,500
Variable overhead
Contribution margin
Plant administration				1,408,000
Gross profit

Compute the cost driver rates.

Note: Round "Material handling", "Machining", and "Shipping" answers to two decimal places.

Activity	Unit Rate
Machine setup		per setup
Order processing		per order
Materials handling		per movement
Machining		per machine-hour
Shipping		per unit shipped

Complete the income statement using the activity-based costing method suggested by the employee team.

Note: Do not round your intermediate calculations. Input all amounts as positive values.

COMMONWEALTH DEVICES
Lake Plant
Income Statement
	CFit-1	CFit-2	CFit-Xtra	Total
Sales revenue	$888,800	$1,424,000	$1,212,000	$3,524,800
Direct costs:
Direct material	200,000	288,000	248,000	736,000
Direct labor	48,000	60,500	128,000	236,500
Variable overhead
Machine setup				200,000
Order processing				152,000
Material handling				200,000
Machining				104,000
Shipping				84,000
Contribution margin
Plant administration				1,408,000
Gross profit