Accessorize make and sell two products called X and Y. An activity-based costing system has been implemented to replace the traditional absorption costing system.

The annual estimated production activity cost pools and cost driver activity levels for all output are as follows:

Activity Cost Pool ($)		Activity Level
Purchasing materials	$160,000	4,000 purchase orders
Storing materials	$170,000	3400 issue notes
Setting up machinery	$100,000	100 set ups
Running machinery cost	$250,000	25000 machine hours
Total production overhead $750000

An analysis of actual annual production usage based on activity cost pool for two products types are as follows:

	X	Y
Units produced	4,000 units	2000 units
Purchase orders	800	1400
Stores issue notes	250	700
Setups	140	250
Machine hours	10000	5000
Direct materials	$35000	$15000
Direct labor	$200000	$30000

Required:

1. Calculate the production cost per unit for X and Y using the machine hour overhead absorption rate under the traditional system.
2. Calculate the activity rates.
3. Calculate the production cost per unit for X and Y using the activity-based costing system.
4. Comment on the costing of both the products under absorption (traditional) costing and activity-based costing methods based on your calculations.