Peppers Products manufactures and sells two types of chew toys for petsSqueaky 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	$	139,000		$	168,000		$	307,000
Direct materials		20,000			21,000			41,000
Direct labor		70,000			30,000			100,000
Overhead costs
Administration								20,000
Production setup								45,000
Quality control								15,000
Distribution								19,000
Operating profit							$	67,000

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	20
Performing quality control	Number of inspections	30	30
Distribution	Number of units shipped	70,000	120,000

Required:

a. Complete the income statement using the preceding activity bases.

c. Restate the income statement for Pepper's Products using direct labor costs as the only overhead allocation base.

Complete this question by entering your answers in the tabs below. Required A Required C Complete the income statement using the preceding activity bases. (Do not round intermediate calculations. Input all amounts as positive values.) Account Squeaky Silent Total Sales revenue $ 168,000 $ 307,000 Direct materials 21,000 41,000 Direct labor 30,000 100,000 Overhead costs: Administration 20,000 Setting up 45,000 Performing quality control Distribution 15,000 19,000 Required C > Total overhead costs Operating profit (loss) 139,000 $ 20,000 70,000