Goodwill LLC manufacturing two products, A and B. The company currently adopts traditional method of charging overheads to the products based on labour hours. The company now wishes to adopt the Activity Based Costing method of allocating overheads, to do its product costing accurately. The company furnishes the following data for a year: Direct material @ RO 5 per Kg Direct Labour @ RO 10 per hour Product A 6 Kgs 4.5 hours Product B 5 Kgs 5 hours Product Total number Annual Output (units) Total machine Total number of purchase of set ups hours orders 100 500 75 700 40 10 The annual overheads are as under: Volume related activity costs RO 20,000 Set up related costs RO 15,000 Purchase related costs RO 35,000 Total RO 70,000 As management accountant of the company, you are required: a. To compare and analyze the product cost per unit using traditional method and ABC method on the basis of Direct Labour Hours. (4+4=8 marks) b. Calculate the amount cost distortion for each product and give your opinion on the company's decision to change overhead absorption system. (2 marks)