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 $5,000,000 1,500,000 500,000 Total $7,000,000 2,100,000 900,000 720,000 435,000 294,000 820,000 $1,731,000 Sales revenue Direct materials Direct labor Overhead costs Administration Production setup Quality control Distribution Operating profit $2,000,000 600,000 400,000 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 staff, 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 Ergo Standard Activity Base Setting up Performing quality control Distribution Cost Driver Number of production runs Number of inspections Number of units shipped 50 100 210 1,800 210 6,400 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. Required A Required C Complete the income statement using the preceding activity bases. (Do not round intermediate calculations.) Account Sales revenue Direct materials Direct labor Overhead costs: Administration Production setup Quality control Distribution Total overhead costs Operating profit (loss) Ergo Standard Total $ 2,000,000 $ 5,000,000 $ 7,000,000 $ 600,000 $ 400,000 1,500,000 $ 2,100,000 500,000 900,000 720,000 435,000 294,000 820,000 Required A Required C Restate the income statement for EZ-Seat using direct labor costs as the only overhead allocation base. (Do not round intermediate calculations.) Account Sales revenue Direct materials Direct labor Overhead costs Operating profit (loss) Ergo Standard Total $ 2,000,000 $ 5,000,000 $ 7,000,000 600,000 1,500,000 2,100,000 400,000 500,000 900,000