Success Sdn Bhd manufactures two computer products: Msuite and Ibrowser. The company currently uses a single plant-wide overhead rate based on direct labour hours. Production and product costing data are as follows:

	MSUITE	IBROWSER
Production quantity	1,000 units	5,000 units
Direct material per unit	RM40	RM60
Direct labour hour per unit	2 hours	3 hours
Direct labour rate per hour	RM15	RM15

The manufacturing overhead is as follows:

Machine related costs	RM450,000
Set-up and inspection	RM180,000
Engineering	RM90,000
Plant related costs	RM96,000
TOTAL	RM816,000

You as newly appointed Management Accountant have decided that the company's traditional volume-based product costing system may be causing a distortion between the company's two products.

After doing the analysis of costs, you have identified the following costs drivers for four activity cost pools.

Activity cost pool	Cost driver
Machine related costs	Machine hours
Set-up and inspection	Number of production runs
Engineering	Engineering change order
Plant related costs	Square footage of space

You have also gathered the following additional information:

1. Each Msuite requires 4 machines hours, whereas each Ibrowser requires 1 machine hour.
2. Msuite is manufactured in batches of 50 units per production run, Ibrowser is manufactured in batches of 250 units per productionrun.
3. A total of 100 engineering change orders were received. Three quarters of engineering change orders relates toIbrowser.
4. The plant has 1,920 square feet of space, 80% of which is used in the production of Msuite.

Required :

a ) Compare the total production cost per unit for each product byusing :

1. the labour hours as the costdriver
2. activity based costingsystem

b ) Discuss briefly the results obtained in part (a) above. Do you have anysuggestions for the top management of Success SdnBhd?