1. Analyse and explain the differences in the product costs and target prices for each product line between the two alternative costing systems. Discuss likely reasons for the identified differences.

Traditional costing system

	Standard model	Deluxe model	Heavy duty model
Raw material	27.50	47.75	73.00
Direct labour	20.00	35.00	35.00
Manufacturing overhead	240.00	350.00	350.00
Per unit cost	287.5	432.75	458
Targeted price	603.75	908.775	961.8

Activity based Costing

Activities	Standard model	Direct model	Heavy-duty model
Direct materials	27.5	47.75	73
Direct labour	20	35	35
overhead	62.37	419.97	142.29
Total cost per unit	109.87	502.72	250.29
Target price	230.73	1055.712	525.60