Nichols Inc. manufactures remote controls. Currently the company uses a plant−wide rate for allocating manufacturing overhead. The plant manager is considering

switching−over to ABC costing system and has asked the accounting department to identify the primary production activities and their cost drivers which are as follows:

Activities	Cost driver	Allocation Rate
Material handling	Number of parts	$7.00 per part
Assembly	Labor hours	$10.00 per hour
Inspection	Time at inspection station	$20.00 per minute

The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $150.00 per labor hour.

Nichols' management is considering to implement ABC system because ________.

A. ABC system is a highly refined costing system

B. ABC system requires minimal expertise to operate

C. ABC system provides more accurate direct cost figures

D. ABC system can be implemented cheaply