It is remarkable that the sponge cake results from the existing costing system were overestimated by $0.18, while the Danish cake results were underestimated of $2.11. This creates a trivial gap of 4.88% lower in the production of sponge cake, while 48.17% is considerably higher in the case of Danish. The reason is that both costing systems allocate overhead costs according to different cost pools and cost drivers (Horngren et. al. 2014). The current costing system allocates all overhead costs into a single cost pool using a single unit cost driver, namely the number of products produced. Therefore, as in Cambden Cakes, high volume products are overpriced and low volume products are underpriced because all manufacturing costs are treated as homogeneous in current costing systems. In contrast, ABC systems use 22 activity cost pools and 11 different cost drivers for different activities. Subsequently, it accurately represents the cause and effect relationship between activity and cost and therefore costs are allocated more accurately (Horngren et. al. 2014). Costs are clearly allocated based on consumption or demand for individual products for each