Thatcher Supply manufactures and sells two types of pet doors-Standard and Hi-Tech. The Standard model is a basic opening installed in a door. The Hi-Tech model is automated and includes several safety features using electronics. The Hi-Tech model requires shorter production runs and more frequent inspection to ensure quality standards are met. In August, Thatcher Supply had the following financial results: THATCHER SUPPLY Income Statement For the Month of August Standard Sales revenue Direct materials Direct labor Overhead costs Administration Machine setup Quality assurance Machine maintenance Operating profit Hi-Tech $ 302,500 64,520 111,000 $ 208,500 47,300 54,000 Other selected information for units produced in August follow: Units produced Direct labor-hours per unit Machine-hours per unit Standard Hi-Tech 2,660 2 8 660 4 2 Total $ 511,000 111,820 165,000 61,320 59,080 25,800 52,800 $ 35,180 Thatcher Supply currently uses direct labor-hours to allocate all overhead to the two models but is considering implementing an activity-based costing system. After interviewing the sales and production staff, the financial staff suggests they allocate administrative costs on the basis of revenue. They would use the following cost drivers to allocate the remaining three pools of overhead costs: Activity Machine setup Quality assurance Machine maintenance Cost Driver Number of production runs Number of inspections Number of machine-hours Required: Activity Level Standard Hi-Tech 10 25 10 2,000 10 1,000 a. Complete the product-line income statement using the current system using direct labor-hours to allocate overhead costs. b. Complete the product-line income statement using the proposed ABC system to allocate overhead costs. Complete this question by entering your answers in the tabs below. Operating protit Other selected information for units produced in August follow: Units produced Direct labor-hours per unit Machine-hours per unit Standard 2,660 2 8 Hi-Tech 660 4 2 P 23,100 Thatcher Supply currently uses direct labor-hours to allocate all overhead to the two models but is considering implementing an activity-based costing system. After interviewing the sales and production staff, the financial staff suggests they allocate administrative costs on the basis of revenue. They would use the following cost drivers to allocate the remaining three pools of overhead costs: Activity Machine setup Quality assurance Machine maintenance Required: Cost Driver Activity Level Standard Number of production runs Number of inspections Number of machine-hours 10 10 Hi-Tech 25 10 2,000 1,000 a. Complete the product-line income statement using the current system using direct labor-hours to allocate overhead costs. b. Complete the product-line income statement using the proposed ABC system to allocate overhead costs. Complete this question by entering your answers in the tabs below. Required A Required B Complete the product-line income statement using the current system using direct labor-hours to allocate overhead costs. Note: Do not round intermediate calculations. Input all amounts as positive values. Account Sales revenue Direct materials Direct labor Overhead costs Operating profit (loss) Standard Hi-Tech Total $ 302,500 $208,500 64,520 47,300 111,000 54,000 $511,000 111,820 165,000 199,000 $ 35,180 < Required A Required B > Direct labor-hours per unit Machine-hours per unit 2 8 4 2 Thatcher Supply currently uses direct labor-hours to allocate all overhead to the two models but is considering implementing an activity-based costing system. After interviewing the sales and production staff, the financial staff suggests they allocate administrative costs on the basis of revenue. They would use the following cost drivers to allocate the remaining three pools of overhead costs: Activity Machine setup Quality assurance Machine maintenance Required: Cost Driver Number of production runs Number of inspections Number of machine-hours Activity Level Standard Hi-Tech 10 25 10 2,000 10 1,000 a. Complete the product-line income statement using the current system using direct labor-hours to allocate overhead costs. b. Complete the product-line income statement using the proposed ABC system to allocate overhead costs. Complete this question by entering your answers in the tabs below. Required A Required B Complete the product-line income statement using the proposed ABC system to allocate overhead costs. Note: Do not round intermediate calculations. Input all amounts as positive values. Account Sales revenue Direct materials Direct labor Overhead costs: Administration Machine setup Quality assurance Machine maintenance Total overhead costs Operating profit (loss) Standard Hi-Tech Total $ 302,500 $ 64,520 208,500 $ 47,300 511,000 111,820 111,000 54,000 165,000 Required A 61,320 59,080 25,800 52,800 199,000 $ 35,180 Required B