Kupilah Sdn Bhd $($KSB$)$ is the main distributor and

processor of different blends of coffee in the Southern area.

KSB purchased coffee beans from oversea and roasts,

blends and packages them. The two famous products of

KSB$,$ KupiKu and KupiAi, are sold in a pack of one

kilogram.

In the manufacturing process, KSB uses direct labor costs

as the basis to allocate the manufacturing costs. The

followings are the budgeted data for the year $2023$:

The expected prime cost per pack of the products are as

follows:

KSB accountant, Mr Emir, has just come back from a

training session at Kuala Lumpur. During the training, he

was introduced to the benefit of activity$-$based costing to

measure product cost. He has developed the following

revised budgeted manufacturing costs for KSB for the year

$2023.$

The information on the production of both products is

shown below. There is no beginning inventory of direct

materials for both products.

REQUIRED:

$($a$)$ Calculate product cost per unit using the traditional

costing for KupiKu and KupiAi.

$($b$)$ Calculate product cost per unit using the activity$-$based

costing for KupiKu and KupiAi.

$($c$)$ Explain TWO $(2)$ factors that tend to result in cost

distortion if KSB refuses to agree with Mr$.$ Emir to use

activity$-$based costing as their product costing system.