Question: QUESTION 4 United Bhd uses an activity based budgeting (ABB) system to budget its product costs. It manufactures two products, product Q and product R.

QUESTION 4

United Bhd uses an activity based budgeting (ABB) system to budget its product costs. It manufactures two products, product Q and product R. The budget details for these two products for the forthcoming period are as follows:

Product Q Product R

Budgeted production (units) 80,000 120,000

Number of machine setups per batch 4 3

Batch size (Units) 5,000 4,000

The total budget cost of setting up the machine is $74,400

Required

(a) Discuss FOUR (4) objectives of budgeting.

(b) Calculate the budgeted machine set up cost per unit of product Q and R.

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