Question 16 GoGo Ltd. manufactures three models of children's swing sets: Standard, Deluxe, and Super. The Standard set is made of steel, the Deluxe set is made of aluminum, and the Super set is made of a titanium-aluminum alloy. Because of the different materials used, production requirements differ significantly across models in terms of machine types and time requirements. However, once the parts are produced, assembly time per set is similar for the three models. For this reason, GoGo has adopted the practice of allocating overhead costs on the basis of machine hours. Last year, the company produced 5,000 Standard sets, 500 Deluxe sets, and 2,000 Super sets. The company had the following revenues and expenses for the year: Total $1,415,000 590,000 92,000 GOGO LTD. Income Statement Year Ended December 31, 2020 Standard Deluxe Super Sales $475,000 $380,000 $560,000 Direct costs: Direct materials 200,000 150,000 240,000 Direct labour 54,000 14,000 24,000 Variable overhead costs: Machine set-ups Order processing Warehouse Shipping Contribution margin Fixed overhead costs: Plant administration Other Gross profit . . 24,790 59,800 91,200 32,000 525,210 . . . 88,160 182,900 $254,150 The chief financial officer of GoGo has hired a consultant to recommend cost allocation bases. The consultant has recommended the following: Activity Level Activities Cost Drivers Standard Deluxe Super Total Machine set-ups No. of production runs 24 19 24 67 Sales order processing No. of sales orders received 350 240 330 920 Warehouse costs No. of units held in inventory 205 135 140 480 Shipping No. of units shipped 5,140 510 2,350 8,000 The consultant found no basis for allocating the plant administration and other fixed overhead costs, and recommended that they not be applied to products. The consultant found no basis for allocating the plant administration and other fixed overhead costs, and recommended that they not be applied to products. (a) Complete the income statement using the bases recommended by the consultant. Do not allocate any fixed overhead costs. (Round overhead rates to 3 decimal places. e.g. 25.225 and final answers to 0 decimal places, e.g. 1525.) GOGO LTD. Income Statement Year Ended December 31, 2020 Standard Deluxe $475,000 $380,000 Super $560,000 Total $1,415,000 Sales Direct costs: Direct materials Direct labour Variable overhead costs: 200,000 54,000 150,000 14,000 240,000 24,000 590,000 92,000 Machine set-ups 24,790 Order processing 59,800 Warehouse 91,200 Shipping 32,000 Contribution margin 525,210 Fixed overhead costs: Plant administration Other Gross profit 88,160 182,900 $254,150