Gash Ltd. manufactures three different products and the following information is available concerning these products together with other operating statistics and information. The company calculates selling price as a mark up on cost of 10%. The company has total overheads of Ksh. 748,800, which are currently allocated on a plant-wide basis using direct labour hours as the absorption base. Gash Ltd. is considering implementing an Activity Based Costing (ABC) system and has recently identified various cost drivers and assigned costs to related activity cost pools as follows: Activity: Cost Driver: Cost Pool: Material Inspections Material Quantity 320,000 Machine Maintenance Machine Hours 316,800 Production Scheduling Production Set Ups 112,000 Additional information is as follows: Products: Alp Bep Cip Production (Units) 5,000 8,000 7,500 Prime Cost Ksh.64,000 Ksh. 64,000 Ksh. 72,000 Machine Hours 24,000 8,000 16,000 Production Set Ups 105 305 215 Raw Material (kg) 400,000 240,000 640,000 Labour Hours 32,000 16,000 48,000 Required: (a) Using the traditional approach to accounting for overheads, calculate the product cost per unit for each of the three products. (8 Marks) (b) Using the principles of Activity Based Costing, calculate the product cost per unit for each of the three products. (8 Marks) (c) Explain the difference in your answers to (a) and (b) and the potential implications for decision making in Kala Ltd.. 4