Fergana Coffee Itd specialises in the production of Coffee. The Company specifically produce two types of Coffee Green and Dried. The Product costs are computed on an overhead absorption-rate basis using a labour-hour method. Prices are set based on costs plus 30 per cent. The planned figures for next year are as follows: Next year's overheads are planned to be 128,000. Direct labour is 7.50 hour. The company has reduced the selling price of Dried Coffee, with the result of a very low profit margin. The company employed a new management accountant who suggested to the management team to try the activity-based costing approach. An analysis of the overheads led to a grouping of the main business activities into Grinders (75,000), Dispensers (53,000) costs. These activities can be allocated to the respective cost drivers of machine hours, dispensers order. This reflects the use of resources in each area. Further investigation showed the proportion of each Coffee (Dried and Green) of the total volume of products: Required: 1. Calculate for each product the full cost and selling price using: i) The absorption costing method (8 marks) ii) The activity-based costing method (12 marks) 2. Discuss two advantages of the activity-based costing method and two disadvantages of the method. (10 marks)