Refer to the description given for Wheelco, Inc. in the preceding exercise. Suppose the firm’s president has decided to implement an activity-based costing system.

Required:

1. List and briefly describe the key features that Wheelco’s new product-costing system should have.

2. What impact will the new system be likely to have on the company’s situation?

3. What strategic options would you expect to be suggested by the product-costing results from the new system?