GWS is a company which produces three types of garden ornaments (gnomes, windmills and sundials) for general sale. The company is structured such that each garden ornament is a profit centre. Each of the profit centres has a manager who is responsible for the performance of that centre. The company currently uses a traditional absorption costing approach to account for overheads, but the Managing Director is considering the introduction of Activity Based Management (ABM). The three types of ornament produced by the company are first machine moulded into the required shape and then finished by hand. The following information is available for the forthcoming period:

	Gnomes	Windmills	Sundials
Sales and production (000s units)	60	30	40
Selling price per unit (R)	30	40	20
Direct cost per unit (R)	10	15	5
Moulding Department (machine hours/unit)	2.0	4	1.5
Finishing Department (labour hours/unit)	1.5	2	1.0

The company currently allocates overheads to the garden ornaments using the following overhead absorption rates:

Moulding Department R4 per machine hour

Finishing Department R3 per labour hour

However, because the Managing Director wishes to introduce ABM, the overhead costs have been categorised into the following cost pools:

Cost pool	R000
Moulding	570
Set up	272
Finishing	437
Purchasing	155
Administration	336

The following information is also available for the period:

	Hours
Moulding machine hours	300 000
Finishing labour hours	190 000

	Gnomes	Windmills	Sundials
Sales orders	15 000	6 000	9 000
Purchase orders	7 800	12 200	4 800
Set ups	950	260	150

Required:

Prepare two separate profit statements for the forthcoming period which clearly show the profit/loss for each type of ornament and the total profit/loss for the company using:

3.1. Traditional absorption costing (10)

3.2. Activity Based Costing (15)