Question 1 The budgeted information for CMS Limited for the next period is as follows: Products A B C Sales and production units 12,000 units 8,000 units 3,000 units Unit sales price $190 $220 $175 Prime cost per unit (before overheads) E52 E 85 655 Machine dept.(machine hours per unit) 2 hours 4 hours 3 hours Assembly dept. (assembly labour hours per unit) 8 hours 3 hours 1 hour The overheads allocated and apportioned to the machinery and assembly departments (including service department costs) were recovered on the basis of a machine overhead recovery rate of $20 per hour (machine department) and $12 per labour hour in the assembly department. The Managing Director of CMS Ltd has requested that you compute budgeted profit (by product) for the next period on the basis of activity-based costing and then compare these profits with the profits calculated using the conventional absorption basis currently used by CMS Ltd.You have agreed with the Managing Director that five cost pools be created as follows: Machining department Assembly department Set-up costs Maintenance requests Material handling The following is an analysis of the overheads with their appropriate cost drivers: Cost Pool Cost Driver Machining department $390.000 Machine hours 65.000 Assembly department 1246.000 Labour hours 123.000 Set-up costs 1720.000 No set-ups 90 Maintenance requests 1962.000 No requests for maintenance 80 Material handling E458.000 No receipts of material 250 (2,776,000 The product cost driver analysis is as follows: A B C Total Number of get-ups 40 30 20 90 Number of requests for maintenance 20 35 25 90 Number of receipts of material 100 100 50 250