The Gadget Co produces three products, A$,$ B and C$,$ all made from the same material. Until now, it has used traditional absorption costing to allocate overheads to its products. The company is now considering an activity based costing system in the hope that it will improve profitability. Information for the three products for the last year is as follows:

Production and sales volumes $($units$)$

Selling price per unit

Raw material usage $(kg)$ per unit

Direct labour hours per unit

Machine hours per unit

Number of production runs per annum

Number of purchase orders per annum

Number of deliveries to retailers per annum

$A$

$15,000$

$$7\mathrm{.}50$

$2$

$0\mathrm{.}1$

$0\mathrm{.}5$

$16$

$24$

$48$

The price for raw materials remained constant throughout the year at $$1\mathrm{.}20$ per $kg.$ Similarly, the direct labour cost for the whole workforce was $$14\mathrm{.}80$ per hour. The annual overhead costs were as follows:

Machine set up costs

Machine running costs

Procurement costs

Delivery costs

Required:

$($a$)$ Calculate the full cost per unit for products A$,$ B and C under traditional absorption costing, using direct labour hours as the basis for apportionment.

$($b$)$ Calculate the full cost per unit of each product using activity$-$based costing. $($ACCA F$5$ Performance Management$)$

NB:

Production run is cost driver for machine setup costs

Machine hours is cost driver for machine running costs

Purchase orders is cost driver for procurement costs

Delivery to retailers is cost driver for delivery costs