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-Seats results for the last fiscal year are shown in the statement below.

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 statement below EZ-SEAT, INC. Income Statement Ergo Sales revenue Direct materials Direct labor Overhead costs Standard $4,000,000 1,200,000 400,000 Total $7,000,000 2,100,000 1,000,000 $3,000,000 900,000 600,000 Administration Production setup Quality control Distribution 600,000 496,000 270,000 640,000 S1,894,000 Operating profit 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 Level Standard Activity Base Setting up Performing quality control Distribution Cost Driver Number of production runs Number of inspections Number of units shipped 100 180 1,700 6,300 60 180