Here is the problem: Flimsy Play Photography offers two types of products, Deluxe Portraits and Regular Portraits. Last year, Flimsy Play had the following revenues and costs: Deluxe Regular Total Revenue $170,000 $190,000 $360,000 Direct materials $22.000 $22,000 $44,000 Direct labor $86,000 $55,000 $141.000 Indirect costs: Administration $24,000 Production setup $59,000 Quality control $24,000 Marketing $17,000 Operating income $51,000 Flimsy Play 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 and to use the following bases to allocate the remaining overhead: Cost Driver Units Activity Cost Driver Deluxe Regular Production setup Photo sessions 140 240 Quality control Customer inspections 270 190 Marketing Advertisements 56 47 Required: A. Prepare the income statement using the activity bases indicated for the allocation of the indirect costs to the two products. B. Prepare the income statement for Flimsy Play using direct labor costs as the only overhead allocation base. A Flimsy Play Photography Income Statement ABC Costing Basis Rate Deluxe Regular Total Revenue Direct Materials Direct Labor Indirect Costs: Administration Production Setup Quality Control Marketing Total Indirect Costs Operating Income B Flimsy Play Photography Income Statement Labor Hour Basis Rate Deluxe Regular Total Revenue Direct Materials Direct Labor Overhead Costs Operating Income