A commercial catering company produces three standard meal packs about which the following information is available for next year: Pack Expected output Preparation staff time Total material costs (numbers of packs) per pack (minutes) 90,000 10 247,500 B 70,000 12 250,000 40,000 15 180,000 Staff who prepare the meal packs are paid 9 per hour. Apart from preparation staff and material costs, overheads are estimated at 900,000 and are made up as follows: 000 Ordering materials 300 Quality control (1) 90 Packing & dispatch of orders 60 Negotiation with customers (3) 200 Central management costs (2) 250 Total 900 Notes: (1) The quality control costs are related to testing a random sample of orders dispatched. (2) The central management costs are not attributed to any activities and are to be absorbed on the basis of preparation staff hours. (3) Negotiation with customers is affected by the number of orders dispatched. In the coming year, the activity volumes are expected to be: A 85 B 110 200 105 140 Orders for materials Orders dispatched to 160 customers In the current year and in previous years the company has absorbed all overheads using preparation staff hours as the absorption base. (Where necessary answers should be rounded to 2 decimal places) Required a) Determine the full cost of one of each type of meal pack for next year using: 1) A traditional absorption costing approach with preparation staff hours as the absorption base. ii) An activity based costing approach using the information given above. b) Discuss the assertion that activity based costing is likely to produce a fairer unit product cost than traditional total absorption costing