Nobis Company uses an ABC system. Which of the following statements is/are correct with respect to ABC?

I. Departmental costing systems are a refinement of ABC systems.

II. ABC systems are useful in manufacturing, but not in merchandising or service industries.

III. ABC systems can eliminate cost distortions because ABC develops cost drivers that have a cause-and-effect relationship with the activities performed.

1. I, II, and III are correct.

2. II and III only are correct.

3. III only is correct.

4. None of the listed choices is correct.