Panda Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, MEGA and LIGA, about which it has provided the following data:

MEGA LIGA

Direct materials per unit................ RM10.20 ............RM 50.50

Direct labor per unit ...................... RM8.40 .............RM25.20

Direct labor-hours per unit............ 0.40 ....................1.20

Annual production......................... 30,000.................. 10,000

The company's estimated total manufacturing overhead for the year is RM1,464,480 and the company's estimated total direct labor-hours for the year is 24,000. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:

Activities and Activity Measures Estimated Overhead Cost (RM)

Supporting direct labor (DLHs) 52,000

Setting up machines (setups) 132,480

Parts administration (part types) 780,000

Total RM1,464,480

MEGA LIGA Total

Supporting direct labor ...... 12,000 12,000 24,000

Setting up machines........... 864 240 1,104

Parts administration ........... 600 960 1,560

Required:

a) Determine the manufacturing cost per unit of each of the company's two products under the traditional costing system

b) Determine the manufacturing cost per unit of each of the company's two products under activity-based costing system

c) Which product is overcosted and which product is undercosted?

d) Calculate the distortion cost.

e) What is the impact if Panda Manufacturing Corporation use traditional costing system?