 To keep the ABC system manageable, companies need to keep the system as simple as possible, yet refined enough to accurately determine product costs. The cost hierarchy helps managers understand the nature of each activity cost pool and what drives it. Some costs are able to be refined down to the unit level, whereas some just can't be refined past the plant level. The least refined allocation base is considered the plant-wide level. These costs occur regardless of how many units, batches, or product lines are produced by the plant. Examples include cost of depreciation, insurance, property tax, and maintenance on the entire production plant. Often these costs are allocated with a plant-wide cost driver like direct labor hours. The product line level is slightly more refined. Some of our costs and activities can be traced to a particular product line, like fluid milk or yogurt or ice cream, but can't be refined beyond that point. The batch level is our next most refined level. In this case, we can trace costs to a batch, like whole milk or 2% milk, but not to the specific unit. Finally, our most refined allocation basis is the unit level. Here, activities and costs can be traced to a specific unit, like cremaweber skim milk gallon. This slide shows other examples. I would encourage you to pause the video and look closely at these.