Design Tree Ltd manufactures customized wooden furniture. The following information is available for two of their products:

	Rectangle dining table	Artistic coffee table
Selling price per unit	$200	$175
Direct material per unit	$50	$35
Direct labour per unit	$30	$30
Units produced and sold	10 000	18 000

The total number of activities for each of the two products during the period are as follows:

	Rectangle dining table	Artistic coffee table
Number of purchase requisitions	1 200	2 000
Number of set-ups	240	300

Overhead costs have been analyzed as follows:

Inspecting quality assurance (cost driver is number of purchase requisitions) $1 400 000

Production scheduling and machine set-up (cost driver is number of set-ups) $1 200 000

Required (show your workings for calculations & write in your own words):

(a) Calculate the profit for each of the product using activity-based costing.

(b) Explain two (2) reasons when it is not useful to incorporate activity-based costing in a company .