![]() Cost pool and cost drivers are taken care of in this method. It is a very effective tool and can help the organization reach a fair allocation of the overheads. The Activity Based Costing is also somewhat expensive because hiring an expert to carry on the process can be a bit higher.Īctivity Based Costing is a method companies use to arrive at an accurate cost or price of the product.Thus the cost per unit calculation can affect very badly. Expert knowledge requires if the company follows the Activity Based Costing method since it can be difficult to identify the cost drivers followed by the allocation.Sometimes the cost allocation is done arbitrarily or by taking certain assumptions. ![]()
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