LG Ltd has a long and proud history of providing innovative products. The company produces three types of tablets: professional, family, and children. The company is currently using a traditional costing system with machine hours as the cost drive but is considering a move to activity-based costing. In preparation for the possible switch, LG has identified four cost pools and respective cost drivers:

Cost Pools	Cost drivers
Materials handling	Orders executed
Set up costs	Number of production runs
Quality control	Number of production runs
Machine maintenance	Number of engineering hours

The company has also compiled the following information (per unit):

	Family	Professional	Children
Production (units)	200	100	100
Direct material ()	35	40	30
Direct labour ()	30	20	15
Machine hours (per unit)	4	5	3

The actual indirect costs were as follows:

Materials handling ()	5,000
Set up costs ()	3,000
Quality control ()	3,000
Machine maintenance ()	5,000

These tablets are produced in production runs of 10 units. The number of engineering hours per batch was 20 and the number of orders executed was 10 (each order being for a batch of 10 of a product).

Required:

1. Calculate the total costs for each product using traditional overhead recovery (plant-wide rate using machine hours) and assuming normal absorption costing.

2. Calculate the total cost for each product using activity-based costing.

3. Compare the unit product costs, show the differences and comment briefly on any conclusions which may be drawn which could have pricing and profit implications.