readings.bbk.ac.uk Management - Birkbeck, University of London https Question 1. Turbomach Ltd produces a range of specialised car components. The car components are produced in batches. The production process involves cutting, bending and welding aluminium sheets and tubing using a special shaping machine. The car components are then finished by hand. Two of their specialised components are the W12 and the W18. Current selling prices are W12 60; W18 40. The budgeted data for 2016 is as follows: MODEL: Budgeted output for the year Direct material weight per unit Direct material cost per unit Direct labour time per unit Direct labour cost per unit Number of batches Shaping machine time per unit W12 2,200 units 25kg 12 0.60 hour 5.40 220 0.30 hour W18 1,800 units 20kg 10 0.40 hour 3.60 150 batches 0.20 hour ACTIVITY Inspection Shaping machine Material handling COST POOL 36,000 36,000 21.000 COST DRIVER Number of production batches Shaping machine hours Weight of material handled Budgeted core costs, for management and administration, are 39,000 Required: I a) Using Activity Based Costing, calculate the rate for each cost driver. (9 marks) b) Prepare a budgeted yearly operating statement for Turbomach Ltd. You should show the following separately, within the statement 1. The budgeted output for each product per year; The contribution to profits for each product and in total before charging activity based costs: w. The profit for each product and in total after charging activity based costs but before charging core costs (non-activity based costs): W. The total profit after charging core based costs. (12marks)