| Traditional costing | Activity-based costing |
| Only manufacturing costs are assigned to products | Manufacturing as well as non-manufacturing costs can be assigned to products (some manufacturing costs may be excluded from product costs) |
| Selling, general and administrative expenses are period expenses | Selling, general and administrative expenses can be assigned to products if there is a cost effect relation between them |
| A single overhead rate is used for the entire factory: direct labour- or machine-hours | A number of overhead cost pools exist, with different allocation bases |
| Costs of unused capacity are assigned to products | Costs of idle capacity are not assigned to products (only the costs of capacity they use) |