One of the shortcomings of ABC is that it is not easy to account for common costs shared by more than one activity.

Activity-Based Costing (ABC)

A method of allocating overhead and indirect costs based on the activities that drive these costs, with the aim of providing more accurate product costing.

Common Costs

Expenses incurred in the production of multiple products or delivery of multiple services that cannot be directly attributed to any individual product or service.

More Than One Activity

A reference to operations or processes that involve multiple tasks or actions, often requiring a broad set of skills or resources.