(a)Alphabeta ProductionLtd.manufactures twoproducts, Alpha andBeta.These products aremade using similarequipmentandmethods. Traditionally, thecompanyhasusedadirect labourhourbasis forabsorbingoverheads.Thebudgeted resultsforthemonth ofSeptember2020aregiven below:

Production/sales(units)

Alpha

6,000,000

Beta

8,000,000

Direct labour(Sh.)

10,800,000

25,600,000

Direct material(Sh.)

9,600,000

14,400,000

Numberofproduction set up hours

25

35

Numberoforders

12

60

Direct labourhoursperunit

1

2

Machinehoursperunit

4

2

Thefactorywasoperationalfor 21600hoursduringthemonth.Theoverheads incurredinSeptember2020wereSh.280,000,000whereasthebudgetedoverhead for themonthwereSh.316,800,000. You are alsoinformed thatbudgetedoverheadscan becategorizedbyactivityasfollows:

Activity

Sh.000

Production set up costs

Orders handled

Machine activity

214,800

36,000

66,000

Required:

(i)Determinethedirect labourhourabsorption rate (3marks)

(ii)Determinethebudgeted cost perunit ofeachproductifthecompany follows thetraditional approachofasinglefactorywideabsorptionrate. (3marks)

(iii)Determinethebudgetedcost perunitifthecompanyadoptsan activitybasedapproach in dealing with overheads.