Zeeshan runs a small crystal vase business. Recently he has been keen to change his costing method to ABC costing. For the next period, he has gathered the following information relating to the operation.

Total overheads for the period: 100,000

Total machine hours for the period: 50,000

He makes the vase in two sizes using the same machine medium and large. The following size specific information are provided.

	Medium vases	Large vases
Production	2,500 units	5,000 units
Material Cost per unit	10	50
Labour Cost per unit	16	20
Machine Hour per unit	5 hrs	10 hrs

The overhead of 100,000 goes into the following activities:

Activity	% of overhead share
Set-up	35%
Inspections	45%
Material handling	20%

The relevant share of the cost drivers for each types of vases are as follows:

Drivers	Medium vase	Large vase	Total
Number of setups	300	50	350
Number of inspections	500	250	750
Number of Goods movements	300	700	1000

Required:

(a) Calculate total cost per unit using absorption costing method.

(11 marks)

(b) Explain why ABC costing may be difficult to implement in practice.