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 Standard $2,000,000 $5,000,000 600,000 1,500,000 400,000 500,000 Total $7,000,000 2,100,000 900,000 Sales revenue Direct materials Direct labor Overhead costs Administration Production setup Quality control Distribution Operating profit 630,000 480,000 252,000 702,000 $1,936,000 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 Base Setting up Performing quality control Distribution Cost Driver Number of production runs Number of inspections Number of units shipped Activity Level Ergo Standard 60 100 180 180 1,700 6,100 Required: a. Complete the income statement using the preceding activity bases. (Do not round intermediate calculations.) Account Total Sales revenue $ Ergo Standard 2,000,000 $ 5,000,000 600,000 $ 1,500,000 400,000 Direct materials $ $ 7,000,000 $ 2,100,000 900,000 Direct labor 500,000 630,000 Overhead costs: Administration Production setup Quality control Distribution Total overhead costs 480,000 252,000 702,000 2,064,000 1,936,000 Operating profit (loss) $ 1,000,000 $ 3,000,000 $ c. Restate the income statement for EZ-Seat using direct labor costs as the only overhead allocation base. (Do not round intermediate calculations.) Account Total Sales revenue Ergo Standard $ 2,000,000 $ 5,000,000 $ 600,000 1,500,000 7,000,000 Direct materials 2,100,000 Direct labor 400,000 500,000 Overhead costs Operating profit (loss) 900,000 0 4,000,000 $ 1,000,000 $ 3,000,000 $