A business can find itself in severe financial difficulties if it is making decisions based on incorrect overhead allocations. This has become more of a problem since overhead has become such a large proportion of total costs. Activity-Based Costing provides the solution by clearly stating a methodology for assigning overhead costs, and the circumstances under which it is most useful. The manual also describes every type of overhead cost and how mis-allocations can occur. In addition, it gives practical advice for setting the scope of an activity-based costing project and improving the odds of project success.
