Problem 10 {15 marks) Canadian Motorcycles Ltd. (CMLLI manufactures and sells two types of motorcycles: Sport and Hog. Budgeted sales for 2022 are as follows: Sport Hog it motorbikes sold 1,000 800 Selling price/cycle $15,000 $20,000 Variable expenses/cycle $8,000 $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: 96 Time Total 5 ll Emp'ees Sport Hog Mat'l handling 40% 6096 $1,000,000 16 Cutting 30% 7096 $3,000,000 30 Assembly 4096 6096 $5,000,000 48 Inspection 50% 5096 $500,000 6 $9,500,000 100 The company has used activitybased costing in the past. The budgeted income from operations for 2022 using ABC is as follows: Sport Hog Total Sales 515,000,000 516,000,\" $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 profitlunit $3,450.00 $2,562.50 The company wants to allocate fixed expenses based on time-driven activity-based costing. An analysis of activities and time per activity is as follows: Untt it activities time in hours Sport Hog Mat'l handling 0.8 10 20 Cutting 5.0 5 6 Assembly 1.3 20 50 Inspection 1.0 5 8 Required: a. (11 marks) Prepare the income from operations for CML using TDABC. b. (4 marks) Interpret the results and make recommendations