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 $3,000,000 900,000 600,000 Total $7,000,000 2,100,000 1,000,000 Standard $4,000,000 1,200,000 400,000 Sales revenue Direct materials Direct labor Overhead costs Administration Production setup Quality control Distribution 600,000 512,000 266,000 720,000 $1,802,000 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 60 Cost Driver Number of production runs Number of inspections Number of units shipped Activity Base Setting up Performing quality control Distribution 100 190 190 1,500 6,500 Required: a. Complete the income statement using the preceding activity bases. (Do not round intermediate calculations.) Standard Account Ergo Total c. Restate the income statement for EZ-Seat using direct labor costs as the only overhead allocation base. (Do not round intermediate calculations.) 3,000,000 $ 4,000,000 $ 7,000,000 900,000 1,200,000 $ 2,100,000 Sales revenue Direct materials $ Account Ergo Standard Total 400,000 3,000,000 $ 4,000,000 7,000,000 Direct labor 600,000 Sales revenue 1,000,000 Overhead costs 1,200,000 900,000 Direct materials 2,100,000 Direct labor 600,000 Administration 600,000 400,000 1,000,000 Production setup 512,000 Overhead costs Quality control 266,000 Operating profit (loss) Distribution 720,000 Total overhead costs 2,098,000 1,802,000 Operating profit (loss)