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 statement below. EZ-SEAT, INC. Income Statement Ergo $2,925,000 550,000 400,000 Standard $2,760,000 500,000 200,000 Total Sales revenue Direct materials Direct labor Overhead costs Administration $5,685,000 1,050,000 600,000 468,000 1,080,000 720,000 1,440,000 Production setup Quality control Distribution 327,000 Operating profit 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 50 Activity Base Setting up Performing quality control Distribution Cost Driver Number of production runs Number of inspections Number of units shipped 100 200 200 6,000 1,500 Required: a. Complete the income statement using the preceding activity bases. (Do not round intermediate calculations.) Ergo Standard Total Account Sales revenue $ 2,925,000 5,685,000 2,760,000 Direct materials $550,000 $ 500,000 1,050,000 600,000 Direct labor Overhead costs: 400,000 200,000 Administration 468,000 Production setup 1,080,000 Quality control 720,000 Distribution 1,440,000 Total overhead costs Operating profit (loss) c. Restate the income statement for EZ-Seat using direct labor costs as the only overhead allocation base. (Do not round intermediate calculations.) Account Ergo Standard Total Sales revenue Direct materials Direct labor Overhead costs 2,925,000 $ 2,760,000 $5,685,000 550,000 500,000 1,050,000 400,000 200,000 600,000 Operating profit (loss)