Peppers Products manufactures and sells two types of chew toys for pets, Squeaky and Silent. In May, Peppers Products had the following costs and revenues:

Pepper's Products Income Statement
For the Month of May
	Squeaky			Silent			Total
Sales revenue	$	43,200		$	48,000		$	91,200
Direct materials		4,000			4,000			8,000
Direct labor		9,600			14,400			24,000
Overhead costs
Administration								6,000
Production setup								12,000
Quality control								6,000
Distribution								4,800
Operating profit							$	30,400

Peppers Products currently uses labor costs to allocate all overhead but 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 overhead:

		Activity Level
Activity	Cost Driver	Squeaky	Silent
Setting up	Number of production runs	10	5
Performing quality control	Number of inspections	30	10
Distribution	Number of units shipped	16,000	24,000

Required:

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

Account	Squeaky	Silent	Total
Sales revenue	$43,200	$48,000	$91,200
Direct materials	4,000	4,000	8,000
Direct labor	9,600	14,400	24,000
Overhead costs:
Administration			6,000
Setting up			12,000
Performing quality control			6,000
Distribution			4,800
Total overhead costs
Operating profit (loss)

c. Restate the income statement for Pepper's Products using direct labor costs as the only overhead allocation base. (Do not round intermediate calculations.)

Account	Squeaky	Silent	Total
Sales revenue	$43,200	$48,000	$91,200
Direct materials	4,000	4,000	8,000
Direct labor	9,600	14,400	24,000
Overhead costs
Operating profit (loss)