The following budgeted information relates to Gloss and Boss, an industrial plastics producer. The company produces 3 different products and budgeted figures for the forthcoming period are: Red (000 Blue (000 Green (000 Sales and production (units 40 35 35 Selling price (per unit) Prime cost (per unit 48 34 92 80 80 64 Hours Hours Hours Machine department (machine hours per unit) Assembly department (direct labour hours er unit Overheads allocated and apportioned to production departments (including service cost centre costs were to be recovered in product costs as follows Machine department at 1.30 per machine hour; Assembly department at 0.83 per direct labour hour The above overheads could be re-analysed into 'cost pools' as follows 000 Cost pool Cost drivei Quantity for the period Machining services Assembly services Set-up costs Order processing Purchasing 300 Machine hours 270 Direct labour hours 300,000 450,000 450 29,000 10,000 19 Set-ups 145 Customer orders 73 Suppliers orders 807 Additionally, the following estimates have been calculated for the period Products Blue Red Green Number of set-ups Customer orders Suppliers' order 108 7,2507,250 2,7003,550 14,500 3,750 Required (a) Prepare and present profit statements using (i) conventional absorption costing; [16 marks] (ii) activity-based costing; [27 marks] (b) Which of the two cost bases do you think the company should use1? Explain your answer with reference to your calculations for part a, and the subsequent impact upon profit. [7 marks] [Total 50 marks]