The budgeted information relates to Brunti for the forthcoming period.

Sales and production (units)

Products

XYI YZT ABW

50,000 40,000 30,000 $$$

Selling price per unit 45 Prime cost per unit 32

Machine department (machine hours per unit) Assembly department (labour hours per unit)

95 84

73 65

Overhead allocated and apportioned to production departments were as follows: Machine department $504,000

Assembly department $437,000

You ascertain that the above overheads could be re-analysed into cost pools as follows

Cost pool

Machining services Assembly services Set up costs

Order processing Purchasing

$000 Cost driver

357 Machine hours

318 Direct labour hours

26 Set ups

156 Customer orders

84 Suppliers orders 941

Quantity for the period

420,000 530,000 520 32,000 11,200

You have also been provided with the following estimates for the budget period.

Number of setup Customer order Suppliers order

Required:

Product

XYI YZT ABW

120 200 200 8,000 8,000 16,000 3,000 4,000 4,200

Prepare and present budgeted profit statement using: (a) Conventional absorption costing; and

(b) Activity base costing

Hours 2

7

Hours 5

3

Hours 4

2