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 Total Revenue $ 1,990,000 $ 1,800,000 $ 3,790,000 Direct materials 597,000 540,000 1,137,000 Direct labor 398,000 180,000 578,000 Overhead costs Administration 187,850 Production setup 420,500 Quality control 294,000 Distribution 720,000 Operating profit $ 452,650 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 Activity Base Cost Driver Ergo Standard Setting up Number of production runs 50 95 Performing quality control Number of inspections 210 210 Distribution Number of units shipped 1,700 6,300

Required: (a) Complete the income statement using the preceding activity bases. (Do not round intermediate calculations.)

(b) Restate the income statement for EZ-Seat using direct labor costs as the only overhead allocation base. (Do not round intermediate calculations. Round "Overhead costs" to the nearest dollar.)