Implementing an ABC system should proceed only if management believes the benefits of doing so will exceed the costs. The costs of an ABC system are not difficult to quantify. They include identifying the key activities, developing an information system to record and report information, collecting data for activity measures, and maintaining the system. More difficult to quantify are the benefits of adopting an ABC system. Required: Identify and discuss at least 3 qualitative benefits of adopting ABC? Discuss whether these can be quantified and why or why not? How could management deal with uncertainty related to any potential benefits of adopting an ABC system? Part 2 - Application Question - 30 Marks Hi-Tek Manufacturing Inc. makes two types of industrial component parts-the B300 and the T500. An absorption costing income statement for the most recent period is shown below: Hi-Tak Manufacturing Inc.. Income Statement Sales $2,100,000 Cost of goods sold 1,600,000 Gross margin 500,000 Sales and administrative expeques experies 550,000 Net operating loss ($50,000) H-Tek produced and sold 70,000 units of 8300 at a price of $20 per unit and 17,500 units of T500 at a price of $40 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labour dollars as the allocation base. Additional information relating to the company's two product lines is shown below 8300 T500 Total Direct materials Direct labouri Manufacturing overhead Cost of goods sold $436,300 $251,700 $ 688.000 $200,000 $104.000 $ 304,000 $808.000 $1,600,000 The company has created an activity-based costing system to evaluate the profitability of its products Hi- Tek's ABC implementation team concluded that $50,000 and $100,000 of the company's advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses were organization-sustaining in nature