Problem 9-54 (Algo) Comparative Income Statements and Management Analysis (LO 9-1,5,6) EZ-Seat, Inc, manufactures two types of reclining chairs, Standard and Ergo. Ergo provides support for the body through a complex set of sensors and requires great care in manufacturing to avoid damage to the material and frame Standard is a conventional recliner, uses standard materials, and is simpler to manufacture Ez Seat's results for the last fiscal year are shown in the following statement E-SEAT, INC Income Statuent Ergo standard $3,000,000 $4,000,000 900,000 1.200,000 600,000 400,000 Total $7,000,000 2.100,000 10,000 Sales revenue Direct materials Direct labor Overhead costs Administration Production setup Quality control Distribution Operating profit 700,000 465.000 300,000 684,000 $1,751,000 E2 Seat currently uses labor costs to allocate all overhead, but management 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 costs. Activity Level Activity Base Cost Driver Ergo Standard Setting up Number of production runs 50 Performing quality control Number of inspections 200 200 Distribution Number of units shipped 1,400 6,200 100 Required: . Complete the income statement using the preceding activity bases c. Restate the income statement for Ez Seat using direct labor costs as the only overhead allocation base Complete this question by entering your answers in the tabs below. Required Required Complete the income statement using the preceding activity bases. (Do not round Intermediate calculations.) Account Sales revenue Ergo 3.000.000 Standard 4,000,000 $ Total 7,000.000 WOLL LUNCE VE Distribution Operating profit 500 584,000 $1,751,000 EZ-Seat currently uses labor costs to allocate all overhead, but management is considering implementing an activity-based costing system. After interviewing the sales and production statt, management decides to allocate administrative costs on the basis of direct labor costs but to use the following bases to allocate the remaining costs Activity Base Setting up Performing quality control Distribution Cost Driver Number of production runs Number of inspections Number of units shipped Activity level Standard SO 100 200 200 1,400 6,200 Required: a. Complete the income statement using the preceding activity bases c. Restate the income statement for E2 Seat using direct labor costs as the only overhead allocation base, Complete this question by entering your answers in the tabs below. Required A Required Complete the income statement using the preceding activity bates (Do not found intermediate calculations 5 Ergo 3.000.000 5 900 000 600.000 Standard 4,000,000 1 200 000 $ 400 000 Total 7.000.000 2.400.000 1,000,000 5 Account Sales revenge Direct materials Direct labor Overhead costs Administration Production setup Quality control Distribution Total overhead costs Operating profit (6 700.000 465,000 300 000 684.000 5 1.500.000 $ 2,400,000 3 3,900,000 A Required C> WOLLY con Distribution Operating profit 300, 684,000 $1,751,000 5 EZ Seat currently uses labor costs to allocate all overhead, but management 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 costs. sed Activity Base Setting up Performing quality control Distribution Cost Driver Number of production runs Number of inspections Number of units shipped Activity level Ergo Standard 50 100 200 1,400 6,200 200 Required: o. Complete the income statement using the preceding activity bases c. Restate the income statement for Ez Seat using direct labor costs as the only overhead allocation base. Complete this question by entering your answers in the tabs below. Required A Required Restate the income statement for EZ-Seat using direct labor costs as the only overhead allocation base. (Do not found intermediate calculations.) 5 Account Sales revenue Direct materials Direct labor Overhead costs Operating profit (loss) Ergo Standard 3,000,000 $ 4,000,000 $ 900.000 1.200.000 600.000 400.000 Total 7,000 000 z 100.000 1.000.000 $ 1,500,000 $ 2 400 000 $ 3,900,000