Intermediate: Preparation of conventional costing and ABC profit statements The following budgeted information relates to Brunti pic for the forthcoming period:

Required:

(a) Prepare and present profit statements using:
(i) conventional absorption costing;
(5 marks)
(ii) activity-based costing; (10 marks)

(b) Comment on why activity-based costing is considered to present a fairer valuation of the product cost per unit.

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Products XYI YZT ABW (000) (000) (000) Sales and production (units) 50 40 30 () () () Selling price (per unit) 45 95 73 Prime cost (per unit) 32 84 65 Machine department (machine hours per unit) Assembly department (direct labour hours per unit) Hours Hours Hours 2 5 4 7 3 2