2 4 3 N The following budgeted information relates to Brunti Inc. for the forthcoming period: 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 Hours Hours Hours Machine department (machine hours per unit) 5 Assembly department (direct labour hours per unit) 7 3 Overheads allocated and apportioned to production departments (including service cost centre costs) were to be recovered in product costs as follows: Machine department at $1.20 per machine hour Assembly department at $0.825 per direct labour hour You ascertain that the above overheads could be reanalyzed into 'cost pools' as follows: Quantity for the Cost pool $000 Cost driver period Machining services 357 Machine hours 420 000 Assembly services 318 Direct labour hours 530 000 Set-up costs 26 Set-ups 520 Order processing 156 Customer orders 32 000 Purchasing 84 Suppliers orders 11 200 941 You have also been provided with the following estimates for the period: Products ABW Number of set-ups 120 200 200 Customer orders 8 000 8 000 16 000 Suppliers' orders 3 000 4 000 4 200 Required: (a) Prepare and present profit statements using: (1) 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. (5 marks) (Total 20 marks) XY1 YZT