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Activity based costing is more accurate and complex than traditional costing systems, but that does not necessarily mean that activity-based costing is always better than average cost information. Activity based costing provides a more precise breakdown of indirect costs but are complex and costly to implement. This type of system would be more suited for a business with high overhead costs that manufacture products. A business that provides services would probably be less likely to utilize activity-based costing. Traditional costing methods are generally easier and simpler to understand and implement. Traditional costing uses a predetermined overhead rate to apply indirect costs to products. It does not give managers an accurate picture of product costs because the application of overhead burden rates is arbitrary and applied equally to the cost of all products. (Woodruff) The indirect costs are not allocated to products that consume the costs. Whether the activity-based costing versus traditional costing is better, I think it depends on the purpose of the report and the size of the company.