Integration Exercise 6 Plantwide and Departmental Overhead Allocation; Activity-Based Costing; Segmented Income Statements [LO 2-1, LO 2-2, LO 2-3, LO 2-4, LO 6-4, LO 6-5, LO 7-1, LO 7-3, LO 7-4] Koontz Company manufactures two models of industrial components-a Basic model and an Advanced Model. The company considers all of its manufacturing overhead costs to be fixed and it uses plantwide manufacturing overhead cost allocation based on direct labor-hours. Koontz's controller prepared the segmented income statement that is shown below for the most recent year (he allocated selling and administrative expenses to products based on sale:s dollars) Basic Advanced Total Number of units produced and sold 20,000 10,000 30,000 $3,000,000 2,300,000 700,000 720,000 $2,000,000 $5,000,000 3,650,000 1,350,000 1,200,000 $ (20,000 170,000150,000 Sales 1,350,000 650,000 480,000 Cost of goods sold Gross margin Selling and administrative expenses Net operating income (loss) Direct laborers are paid $20 per hour. Direct materials cost $40 per unit for the Basic model and $60 per unit for the Advanced model. Koontz is considering a change from plantwide overhead allocation to a departmental approach The overhead costs in the company's Molding Department would be allocated based on machine-hours and the overhead costs in its Assembly and Pack Department would be allocated based on direct labor-hours. To enable further analysis, the controller gathered the following information: Assemble and Pack Molding Total Manufacturing overhead costs Direct labor hours: 787,500 $562,500 $1,350,000 Basic Advanced 10,000 5,000 20,000 10,000 30,000 15,000 Machine hours: 12,000 10,000 Basic 12,000 10,000 Advanced