The budgeted information for CMS Limited for the next period is as follows roducts Sales an duction units units units units Unit sales price 190 220 175 cost per unit (before over 85 Machine dept.(machine hours per unit 2 hours 4 hours 3 hours ssembly dept. (assem ours per rs urs unit 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 overhestpropiate cost drivers Cost Pool Cost Driver Machining department Assembly department E390,000 Machine hours iXX) 13,X) E720,000 No set-ups Maintenance requests Material handling 80 2,776,000 The product cost driver analysis is as follows Number of set-ups Number of requests for maintenance Number of receipts of material 6 40 2) 100) Total 0) 80 30 35 20 25 ti) Requirement (a)Prepare a product profit statement for each product for the period on the conventional 12 Marks (b)With regard to Product C, discuss why there is a difference between the profit shown on a 5 Marks (c)Briefly outline the potential benefits to an organisation of using an activity-based costing 8 Marks overhead absorption basis and on the activity-based costing basis. conventional basis compared with that shown on the activity-based costing basis. system Total 25Marks