Chansa Habeenzu plc makes and sells a range of products. Management has carried out an analysis of the total cost of production. The information in the table below reflects this analysis of budget cost for the six month period from 1 January to 30 June 2021.

Table: Budget Data for Six Months to 30 June 2021 Description Product A Product B Material cost per product unit K60 K45 Production line X machine hours per unit 0.8 0.5 Production batch size (units) 100 200 Total production (units) 9000 15000 Components per product unit (quantity) 20 12 Number of customers 5 10 Number of production line set-ups 15 25 Production line X maintenance hours 300 150 Cost category Product line X (K) Factory total (K) Labour, power, etc. 294,000 Set-up of machines 40,000 Production Scheduling 29,600 WIP movements 36,400 Purchasing and receipt of material 49,500 Material scheduling system 18,000 Design/testing routine 16,000 Production line development 25,000 Production line maintenance 9,000 General factory administration 500,000 General factory occupancy 268,000 The analysis has identified that the factory is organized in order to permit the operation of three production lines X, Y and Z. Each production line facilitates the production of two or more products. Production line X only used for the production of products A and B. The products are manufactured in batches on a just-in-time basis in order to fulfil orders from customers. Additional information is available for production line X as follows: (i) Production line machine costs including labour, power, etc., vary in proportion to machine hours. (ii) Costs incurred for production scheduling, WIP movement, purchasing and receipt of materials are assumed to be incurred in proportion to the number of batches of product which are manufactured. Machine set-up costs vary in proportion to the number of set-ups required and are linked to a batch throughput system. (iii) Costs for material scheduling systems and design/testing routines are assumed to be incurred by each product in proportion to the total quantity of components purchased and the total number of types of components used respectively. The number of different components deigned/tested for products A and B are 12 and 8 respectively. (iv) Product line development cost is identified with changes in product design and production method. At present such costs for production line X are apportioned 80 per cent: 20 per cent to products A and B respectively. Production line maintenance costs are assumed to vary in proportion to the maintenance hours required for each product. (v) General factory costs are apportioned to each of production lines X, Y and Z in the ratios 25 per cent: 30 per cent: 45 per cent respectively. Such costs are absorbed by product units at an average rate per unit through each production line. Required: A. Prepare an activity based budget for production line X for six months to 30 June 2021 analysed into sub-sets for activities which are product unit based, batch based, product sustaining, production line sustaining and factory sustaining. The budget should show: (i) Total cost for each activity sub-set grouped to reflect the differing operational levels at which each sub-set is incurred/controlled. (ii) Average cost per unit for each of products A and B analysed by activity sub-set. B. Discuss the incidence and use of each of the following terms in relation to Chansa Habeenzu plc, giving examples from the question to illustrate your answer: (i) Hierarchy of activities (ii) Cost pools (iii) Cost drivers C. Prepare a sequential set of steps which may be included in an investigation of activities in order to improve company profitability.