Activity-based costing (ABC) is a costing method that first assigns cost to activities and then assigns them to products based on the products’ consumption of activities (Lanen, Anderson, & Maher, 2011). Activities are tasks that are required in order for a company to finish its product. ABC was first written about by Alexander Hamilton Church in 1901. He believed that overhead was the cost of different activities of production. He believed that in order to report accurate costs, all of the cost of that product, including portions of overhead, should be reflected in the number (Weil & Maher, 2005). It was made popular in 1988 by Robin Cooper and Robert Kaplan. They defined ABC as “an approach to solve the problems of the traditional cost management systems” (Narong, 2009). This system enabled indirect and support expenses to the driven, first to activities and processes, and then to products, services and customers allowing managers to have a better idea of where their company stands (Kaplan, & Cooper, 1998) Foreign companies were beginning to produce items at a lower cost and higher quality than the United States so therefore, companies needed to be able to accurately identify cost-saving strategies (Weil and Maher, 2005). Conventional costing methods allocated overhead based on a direct cost such as labor. The problem with this is that some activities use more overhead resources then others do and companies are unable to identify the actual costs of processes. For example, a manufacturing company has two products, Product A and Product B. Product A is a simple product and can be manufactured fairly quickly and sells for cheaper than Product B. Product B is more complex though. It is not produced as often. The lower volume item often times uses more overhead resources because of the complexity or the customization of the product. Using conventional