The assembly activities typically take the same amount of labor time per guitar for both types of guitar (about one labor hour per guitar.) Wden Neck Milling Material \\ Shape, Glue, Sand plywoodcumng / Expected annual indirect costs for assembly activities: Assembly Activities include cutting the plywood for the box, shaping, gluing, attaching the milled neck, and sanding. Activities Plywood purchasing Plywood cutting $6,000 Shape, Glue and Sand Guitar $18,000 Setup of assembly area Total $28,500 Other information expected for the year: Traditional Concert Quality Annual Production 400 guitars 200 guitars Quantity of Wooden Blanks Milled 408 blanks 206 blanks lMilling Machine Hours || 204 hours || 154.5 hours Batch size for production 50 guitars 'lO guitar Total Number of Plywood Purchase Orders 20 orders 40 orders lTotal Direct Labor Hours @ 10/hr. (activities do not include Direct labor costs) II 400 hours II 200 hours Total Direct Materials/guitar $56 each $80 each As a consultant, you have been asked to evaluate whether or not Chuck's Guitars should use ABC or continue with their traditional costing system. Which of the following factors should have the greatest influence on your recommendation to use ABC? Chuck's Guitars Template.xlsx o The competition in the market is extreme and knowledge of product profitability will impact decisions. (3 If product costs computed using the ABC system are less than product costs calculated using a traditional system. (3 If direct materials are high relative to other production costs. O Whether all products are produced in approximately equal quantities (i.e., ABC applies only when a high volume product exists.)