The following budgeted information relates to Ashanti Ltd for the next year;

Products

ABC DEF HIJ

Selling and production (units) 50,000 40,000 30,000

Selling price (k per unit) 45 95 73

Prime cost (k per unit) 32 84 65

Machine department (machine hrs. per unit) 2 5 4

Assembly department (direct labour hr. per unit) 7 3 2

Overheads allocated and apportioned to production departments were as follows:

Machine department K504, 000

Assembly department K437, 000

You as management accountant has ascertained that the above overheads could be analysed into cost pools as follows:

Cost pool K000 Cost driver quantity for the period

Machine services 345 machine hour 410,000

Assembly services 376 direct labour hours 514,000

Set-up costs 45 set-ups 600

Order processing 200 customer orders 42,000

Purchasing 76 suppliers orders 12,300

You have also been provided with the following estimated under the same budget review period:

Products

ABC DEF HIJ

Number of set-ups 150 240 240

Customer orders 7,200 7,200 12,000

Suppliers orders 2,500 1,500 3,000

Required;

Prepare budgeted Income statements using:

(a) Conventional absorption costing; and (6 marks)

(b) Activity based costing (14