Colgate Factory Ltd. produces high quality camping equipment. It has a factory plant which produces premium and standard product. The factory uses traditional overhead allocation method applying a single predetermined plantwide rate based on direct Jabour hours (DLH). Over the past year, Colgate has produced 50,000 units for premium brand and 200,000 for standard brand. It has an estimated manufacturing overhead cost of $1,520,000 and estimated total direct labour hours of 400,000 DLHs. The unit costs of the two products are shown below:

Per Unit	Premium	Standard
Direct materials	$40	$30
Direct labour	$24	$18
Direct labour hours	2DLH	1.5DLH

Colgate has recently investigated the possibility of using Activity Based Costing (ABC) approach to determine product unit costs. The new experimental ABC system has three activity cost pools: (1) supporting direct labouti (2) setting}up machines; and (3) parts administration. Basic data pertinent to these three activity cost pols are provided below:

Cost Pools & activity measures	Est Overhead Cost ($)	Activity Premium	Activity Standard	ActivityTotal
Supporting direct labour (DLH)	800,000	100,000	300,000	400,000
Setting up machines (setups)	480,000	600	200	800
Part admin (part types)	240,000	140	60	200
Total manufacturing overhead	1,520,000

Required: a) Prepare a product unit cost for each product based on the traditional method. b) Present in a table to compute the activity rate for each cost pool. c)Present in a table to show how overhead costs are assigned to each product based on ABC method. d)Prepare product unit cost for each product based on the ABC method. e) Explain the reasons for the difference of product cost in these two methods and itsconsequence (see a. and d). f)Comment on the merits and pitfalls of ABC method.