Activity-based costing systems and traditional costing systems tend to always identify the same products as being the most profitable.

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Activity-based costing (ABC) allocates overhead costs more accurately to products or services, considering the specific activities involved in their production. This can lead to different insights on profitability compared to traditional costing systems, which might allocate costs more broadly, often based on a single allocator like machine hours or labor hours. As a result, ABC can reveal that products previously thought to be highly profitable under traditional costing might not be as profitable when the true costs of support activities are considered.

Activity-Based Costing Systems and Traditional Costing Systems Tend to Always