6-40 Operating budget and absorption of overhead. Akanson Crafts Ltd. is an arts gallery that produces three different arts products namely: Akra, Omra, and Okore. The budgeted sales of the products for 2020 were as follow: Materials used in the production of the products are: Two types of labor are used, Assemblers and Crafters, and the standard unit hours for each product are: Production overhead which is absorbed into product costs on direct labor hour basis is budgeted as: These are charged to the products in proportion to sales income of the period. Inventories at the beginning of the period are estimated as: Ending inventories at the end of the period are estimated to increase by 10% and the beginning inventories as well as finished goods and component parts are estimated to reduce by 20%, respectively. Prepare the following budgets: 1. a. Revenues budget b. Production budget in units c. Direct material usage budget d. Material purchase budget e. Direct labor usage budget 2. Prepare the statement showing the valuation of finished inventory at the end of the period. 3. Prepare a budget showing operating income for the period showing the amount of profit contributed by each product. 4. Comment on the usefulness of the above operating budgets to management