MTI makes three types of lawn tractors: M3100, M4100, and M6100. In the past, it allocated overhead to products using machine-hours. Last year, the company produced 10,000 units of M3100, 17.500 units of M4100, and 10,000 units of M6100 and had the following revenues and costs. MTI Income Statement M3100 M4100 M6100 Total Sales revenue $9,000,000 $15,000,000 $13,500,000 $37,500,000 Direct costs Direct materials 3,000,000 4,500,000 3,300,000 10,800,000 Direct labor 600,000 900,000 1,800,000 3,300,000 Variable overhead Setting up machines 2,400,000 Processing sales orders 1,800,000 Warehousing 2,400,000 Operating machines 1,200,000 Shipping 900,000 Contribution margin $14,700,000 6,000,000 Plant administration Gross profit $ 8,700,000 MTI's controller has heard about activity-based costing and puts together an employee team to recommend cost allocation bases. The employee team recommends the following. Activity M3100 M4100 M6100 10 20 Cost Driver Production runs Sales orders received Units held in inventory Machine-hours 180 Setting up machines Processing sales orders Warehousing Operating machines Shipping 400 20 220 200 100 100 6,000 9,000 10,000 10,000 17,500 10,000 Units shipped The employee team recommends that plant administration costs not be allocated to products. Required a. Using machine-hours to allocate overhead, complete the income statement for MTI. Do not allocate plant administrative costs to products. b. Complete the income statement using the activity-based costing method suggested by the employee team. c. Write a brief report indicating how activity-based costing might result in better decisions by MTI. d. After hearing the recommendations, the president expresses concern about failing to allocate plant administrative costs. If plant administrative costs were to be allocated to products, how would you allocate them