Heaven Sdn Bhd is a well-known company manufacturing exclusive popcorn containers. The most popular items from its product line are PCI and PC2. The company is currently using the traditional costing system to determine the production overhead. The product cost per unit is as follows:

	PCI	PC2
Unit manufacture	12,000	38,000
Prime cost (RM)	7.00	8.00
Production overhead (RM)	1.50	2.50
Total product cost (RM)	8.50	10.50

One of the management team members has suggested to the company to calculate the production overhead using an activity-based costing (ABC) system. The amount of production is traceable to the two products as follows:

Activity	Cost driver	Overhead	Cost driver demanded	Cost driver demanded
			PCI	PC2
Purchasing	Number of orders	20,000	15 orders	25 orders
Machining	Machine hours	100,000	5,000 hours	10,000 hours
Quality control	Number of inspections	10,000	50 inspections	150 inspections
Packaging	Number of units produced	6,000	12,000 units	38,000 units

Required:

a) Determine cost driver rates for each of the activities. (8 marks)

b) Calculated the product costs per unit for product PC2 only using the ABC system. (8 marks)

c) compare the product costs per unit of PC2 under the traditional costing system and the ABC system. (5 marks)

d) propose whether this company should use a traditional costing system or an ABC system. provide ONE (1) reason to support your answer. (4 marks)