Nasilele Ltd manufactures and sells components ussed in the computer hardware industry.The company currently charge overheads to products using a plant$-$wide based on direct labour hours.Since its inception $1988,$ the company has invested heavily in advanced manufacturing technologies and has inreased their product range.Nasilele operates in a very competitve market and due to current ecoomic conditions,they are coming under increasing pressure by their customers to reducetheir prices.The company are considering the introduction of an Activity Based Costing$($ABC$)$ system and has provided the following information in relation to their three products:

Product X Product Y Product Z

Direct materials per unit K$100$ K$120$ K$150$

Direct labour hours per unit $10$ hours $8$ hours $9$ hours

Machine hours per unit $4$ hours $6$ hours $6$ hours

Production$/$sales in units $10,0004,0006,000$

Direct labour is paid at K$14$ per labour hours,The company calculates selling price byapplying a mark$-$up on cost of $25\%$

Details of the overheads of Nasilele Ltd$.$Are as follows:

K

Machine related costs $246,000$

Set$-$up costs $180,000$

Delivery costs $68,000$

Quality related costs $64,000$

Further information in relation to all three products is given us follows:

Product X Product Y Product Z

Number of set$-$ups $1003020$

Number of deliveries $1000550450$

Number of inspections $200100100$

Required:

$($a$)$ Calculate the unit production cost and unit profit using the traditional approach to costing.

$($b$)$ Calculate the unit production cost and unit profit based on Activity Based Costing principles.

$($c$)$ identify three reasons why Nasilele Ltd should implement an Activity Based Costing system.

$($d$)$ Evaluate the application of Activity Based Management$($ABM$)$ in a ompany such as Nasilele Ltd$.$