wollen -3,5,6) 9-67. Choosing an Activity-Based Costing System MTI makes three types of lawn tractors: M3100, M4100, and M6100. In the past, it allocated over- head to products using machine-hours. Last year, the company produced 10,000 units of M3100, 17.500 units of M4100, and 10,000 units of M6100 and had the following revenues and costs. cel MTI Income Statement M3100 M4100 M6100 Total $9,000,000 $15,000,000 $13,500,000 $37.500.000 3,000,000 4,500,000 3,300,000 10,800,000 600,000 900,000 1.800.000 3,300,000 Sales revenue Direct costs Direct materials Direct labor. Variable overhead Setting up machines... Processing sales orders... Warehousing Operating machines Shipping Contribution margin Plant administration Gross profit. 2,400.000 1.800.000 2,400,000 1.200,000 900.000 $14.700.000 6,000,000 $ 8.700,000 MTI's controller has heard about activity-based costing and puts together an employee team to recommend cost allocation bases. The employee team recommends the following. Cost Driver Activity Setting up machines.. Processing sales orders. Warehousing Operating machines Shipping Production runs les orders recelved Units held in inventory Machine-hours Units shipped M3100 M4100 M6100 10 20 20 180 400 220 100 200 100 6,000 9,000 10,000 10,000 17,500 10,000 The employee team recommends that plant administration costs not be allocated to products. Required 4. Using machine-hours to allocate overhead, complete the income statement for MTL Do not allocate plant administrative costs to products. Complete the income statement using the activity-based costing method suggested the employee team Write a brief report indicating how activity-based costing might result in better decisions by MTI. d. After hearing the recommendations, the president expresses concern about failing to allocate plant administrative costs. If plant administrative costs were to be allocated to products, how would you allocate them