In activity-based costing, low-volume complex products are usually undercosted and high volume simpler products are overcosted, because the method fails to reflect the different uses of indirect resources.

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Activity-based costing (ABC) is designed to more accurately allocate indirect costs by assigning them based on actual activities and resource usage, which helps in properly costing both low-volume complex products and high-volume simpler products.

In Activity-Based Costing, Low-Volume Complex Products Are Usually Undercosted and High