Activity Based Costing

There are two main benefits.
One is that because the overheads are charged more fairly between different products, it gives more accurate costings. This can be important when deciding on a selling price or when making decisions based on the profitability of individual products.
The other benefit it that it makes the company find out what is causing (or driving) the overheads, and this can result in more efficient working and reduced costs. For example, if some of the overheads relate to the department that checks in orders of raw materials received (e.g. the wages of the people employed in this department), then the cause is the number of deliveries received. Maybe ordering bigger quantities each time and therefore fewer deliveries could mean that we needed fewer staff in this department which would save money. Using ABC makes the company think about these things.

Hope that all makes sense!