Two products, A and B, are made using similar equipment and methods. Data for the last period are:

Product A Product B

Units produced 6 000 8 000

Labour hours per unit 1 2

Machine hours per unit 4 2

Set-ups in period 15 45

Orders handled in the period 12 60

Overheads for period relating to:

$ Production set-ups 179 000

Order handling 30 000

Machine activity 55 000

264 000

A. Calculate overheads to be absorbed per unit of each product based on:

i. absorption costing using labour hour absorption rate. (6 marks)

ii. an ABC approach using suitable cost drivers. (11 marks)

B. Distinguish between activity-based costing and traditional costing.