Costs traced to the activities that drive them, the most accurate overhead allocation method.
Traditional cost allocation methods that spread overheads by headcount or revenue are simple but systematically misleading. They consistently under-cost complex, high-volume, low-margin activities and over-cost simple, low-volume, high-margin ones.
We implement Activity-Based Costing frameworks that identify the specific activities that drive overhead costs and allocate them to products, customers, and services based on actual consumption.