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19. Connington Lid manufactures three products: Simple, Modified, and Custom. Simple is a standard product directed at the mass market and produced in large volumes. Modified is a variation of the Simple product, for a smaller segment of the main market. Custom is a fully customised version of the product, for a specific market niche. The unit price of the three products is calculated by applying a markup to the full manufacturing cost per unit. The mark-up applied is 15% for the Simple product, 25% for the Modified product, and 30% for the Custom product. The company has traditionally allocated overheads to the three products based on labour hours. However, its management accountant has recently reviewed the company's costing system and concluded that the current overhead allocation method is outdated and likely to distort product costs. He suggested adopting activity-based costing. The following information is extracted from the monthly budget: Additionally, the management accountant has produced the following analysis of cost driver usage by type of product: Required: a) Calculate the price per unit of Simple, Modified and Custom under the current costing system (6 marks) b) Discuss merits and limitations of the current costing system. As part of your discussion, comment on whether the current system is likely to support the marketing of the three products. (5 marks) c) Calculate the price per unit of Simple, Modified and Custom under activitybased costing (9 marks)