Medicream Ltd. manufactures a nappy rash cream, which is sold in standard size or large size tubs. The nature of the current manufacturing process means that there is significant direct labor input and manufacturing and overheads are assigned to products on a labor hours basis. Over the last 12 months, a minor part of the production process has been automated and there are plans for further automation. The CEO recently met with a college friend who recommended adopting Activity-Based Costing (ABC) as it would provide much more accurate cost information. Write a report to the CEO outlining your views on what type of costing system is appropriate for Medicream and why.