JK Ltd produces two products, A and B, all made from the same material. Until now, it has used traditional absorption costing to allocate overheads to its products. The company is now considering an activity based costing system in the hope that it will improve profitability. The annual overhead costs were $171 200, breakdown as follows: Machine running costs Set-ups costs Delivery costs $ 100 000 60 000 11 200 171 200 Information for the two products for the last year is as follows: Production and sales volume A 2 000 $160 B 10 000 Selling price per unit Raw material usage per unit (in kg) Direct labour hours per unit Machine hours per unit No of set-ups per annum No of deliveries per annum 15522 20 $80 2 1.5 138 The price for raw materials remained constant throughout the year at $12 per kg. Similarly, the direct labour cost for the whole workforce was $25 per hour. REQUIRED: (a) Compute the full cost per unit for products A and B under traditional absorption costing, using direct labour hours as the basis of apportionment. (b) Compute the full cost per unit for products A and B using activity based costing.