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, 16.500 units of M4100, and 8,000 units of M6100 and had the following revenues and costs: MTI Income Statement M3100 M4100 $9,200,000 $15,600,eee M6100 $14,200,eee Total $39, eee,eee 3,000,000 580,000 4,100,000 870,000 3,4ee,eee 1,770,000 10,5ee,eee 3,220,000 Sales revenue Direct costs Direct materials Direct labor Variable overhead Setting up machines Processing sales orders Warehousing Operating machines Shipping Contribution margin Plant administration Gross profit 2,205,000 1,650,000 2,646,000 1,210, eee 759,000 $16,810,000 5,700,000 $11, 110,000 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. M3100 M4100 M6100 19 Activity Setting up machines Processing sales orders Warehousing Operating machines Shipping Cost Driver Production runs Sales orders received Units held in inventory Machine-hours Units shipped 170 380 110 210 6,400 9,100 8,000 16,500 200 100 8,700 10,000 $ 9,200,000 $ 15,600,000 $ 14,200,000 $ 39,000,000 3,000,000 580,000 4,100,000 870,000 3,400,000 1,770,000 10,500,000 3,220,000 Sales revenue Direct costs: Direct material Direct labor Variable overhead Setting up machines Processing orders Warehousing Operating machines Shipping Contribution margin Plant administration Gross profit 405,000 374,000 693,000| 320,000 855,000 836,000 1,323,000 455,000 945,000 440,000 630,000 435,000 2 2,205,000 1,650,000 2,646,000 1,210,000 759,000 5,700,000 (5,700,000) S