Activity-Based Costing (ABC) Implementation (15 marks)
a. Explain the concept of activity-based costing (ABC) and its advantages over traditional costing methods.
b. A company produces two products, Product A and Product B. Using ABC, allocate overhead costs to each product based on the following activities: setup costs, machine hours, and material handling. Provide the allocation rates and discuss the implications of the ABC results on pricing and product mix decisions.