A company manufactures four products using the same plant and processes.

The following information relates to a production period: -

Product	Volume	Material costs per unit	Direct labour time per unit	Machine time per unit	Labour cost per unit
A	1,100	7	30 minutes	15 minutes	5
B	2,000	7	30 minutes	15 minutes	5
C	1,500	16	120 minutes	60 minutes	9
D	3,950	19	90 minutes	90 minutes	9

Total production overhead recorded by the cost accounting system is analysed under the following headings:

Factory overhead applicable to machine-oriented activity	39,850
Set-up costs	4,180
The cost of ordering materials	1,900
Handling materials	7,680
Administration for spare parts	8,300

Investigation into the production overhead activities for the period revealed the following totals:

Product	Number of set-ups	Number of material orders	No. of times material handled	Number of spare parts
A	1	1	2	3
B	8	3	6	10
C	3	1	2	4
D	8	5	10	8

You are required to:

1. Calculate an overhead cost per product based on traditional absorption costing AND an overhead cost per product using activity based costing.

2. Discuss THREE key differences between traditional absorption costing and activity based costing.