Problem 10 (15 marks) Canadian Motorcycles Ltd. (CML) manufactures and sells two types of motorcycles: Sport and Hog. Budgeted sales for 2022 are as follows: #motorbikes sold Selling price/cycle Variable expenses/cycle Sport Hog 1,000 800 $15,000 $8,000 $20,000 $10,000 CML has four departments: Material handling, Cutting, Assembly, and Inspection. Employees work an average of 2,000 hours per year. Fixed expense information is as follows: Mat'l handling Cutting Assembly Inspection % Time Total $ # Emp'ees Sport Hog 40% 60% $1,000,000 16 30% 70% $3,000,000 30 40% 60% $5,000,000 48 50% 50% $500,000 6 $9,500,000 100 The company has used activity-based costing in the past. The budgeted income from operations for 2022 using ABC is as follows: Sport Hog Sales $15,000,000 $16,000,000 Total $31,000,000 Variable expense (8,000,000) (8,000,000) (16,000,000) Contribution margin 7,000,000 8,000,000 15,000,000 Fixed expenses Mat'l handling (400,000) (600,000) (1,000,000) Cutting (900,000) (2,100,000) (3,000,000) Assembly (2,000,000) (3,000,000) (5,000,000) Inspection (250,000) (250,000) (500,000) (3,550,000) (5,950,000) (9,500,000) Income from operations $3,450,000 $2,050,000 $5,500,000 Net profit/unit $3,450.00 $2,562.50