“Is Activity-Based Costing (ABC) superior to “traditional” costing in which only one overhead pool is used?

Response: I believe Activity-Based Costing is superior to “traditional” costing methods. It has a better way of facilitates the delegation of the decision making for a company. It also helps the management set goals that all the mangers agree on. According to Fundamentals of Cost Accounting, “Activity-based costing (ABC) is a two-stage product costing method that assigns costs first to activities and then to the products based on each product’s use of activities”(Lanen, Anderson, Maher. 2011. P 319). While Traditional costing, is "often allocate costs based on single-volume measures such as direct-labor hours, direct- labor costs, or machine hours. While using a single volume measure as an overall cost driver seldom meets the cause-and-effect criterion desired in cost allocation, it provides a relatively cheap and convenient means of complying with financial reporting requirements"(Luehlfing). The first reason I believe that the Activity-Based Costing(ABC) is superior is because it has "the inherent flexibility to provide special reports to facilitate management decisions regarding the costs of activities undertaken to design, produce, sell, and deliver a company’s products or services. At the heart of this flexibility is the fact that ABC systems focus on accumulating costs via several key activities"(Luehlfing). The benefits that I believe that ABC has for mangers in setting goals include, "assesses costs of individual activities, based on their use of resources"(Patrick). It also "enables accurate costing of all activities to be obtained throughout an organization"(Patrick). It also makes it "easy to identify where high (and low) costs are being incurred and the cause"(Patrick). It is really "a valuable tool for both business and process