Blandozo Kitchens is working on its 2013 production budget. They are looking forward to a strong year, with plans to produce and sell 400 Economy units and 100 Deluxe units. Budget details are shown below. Note there are three cost items included in their costing model: direct materials, dire labour and fabrication. Fabrication is done with a computerized machine, which is leased at a cost $77.77 per machine hour (not including costs for setup or power to operate the machine). Overheac costs totalling $259,245 (see table) are not currently allocated to each unit for costing or pricing Blandozo Kitchens: 2013 Budget-Revenue & Margins /Unit SELLING PRICE Economy $6,000 $1,558 44.00 $1,032 4 $311 $2,901 $3,099 52% Deluxe $7,200 $1,925 54.00 $1,266 Direct Materials Direct Labour Hours Fabrication: Hours TOTAL COST Cost$23.45Hr $389 $3,580 $3,620 50% Cost$77.77/hr MARGIN OVERHEAD ITEMS Materials Handling Shipments Quality Control Fabrication-Setups Total Overhead Cost COST $37,035 $61,725 $86,415 $74,070 $259,245 a) Using normal costing with fabrication hours as the driver, prepare a budgeted overhead rate for 2013. Calculate the total cost and margin per unit for Economy and Deluxe cabinets. (8 Marks Additional Information: Production is done in batches, with batch size of 20 for Economy and 10 for Deluxe. Quality control costs are for inspections. Each economy unit is inspected once. Deluxe units are inspected 3 times. Materials handling costs relate to distribution of materials from the stockroom to the production floor for each batch. Each finished unit is shipped on its own Fabrication setup costs relate to setup of the machine required for each production run. b) Using activity based costing, prepare a set of budgeted overhead rates for 2013 (6 Marks). c) Calculate the total cost and margin per unit for Economy and Deluxe cabinets (6 Marks). Present your analysis and solutions in a professional format. NO report to management is required for this question. You may provide written explanations of your work if you like