In an Activity-based costing system(ABC), the term allocation base is replaced by the term activity measure, and the term cost driver is also used.
The two types of activity measures are :

Transaction driver – a simple count of the number of times that an activity occurs.   This is the least accurate type of activity measure.

Duration driver […]

Before the implementation of ABC system, the following factors need to be considered:
 

It’s implementation needs very strong top management support. Without leadership from top management, some managers may not see any reason to change. Without top management support, the ABC implementation will be seen as unimportant,

The main limitations of ABC are:-

 requires management to estimate costs of activity pools and to identify and measure cost drivers for these pools,

detailed ABC systems are costly to operate and difficult to understand. Many companies are discouraged from using ABC due to the higher cost of identifying multiple activities and applying numerous cost drivers. ABC […]

The differences are tabulated as follows:

 
Traditional Based Costing

1
Relying exclusively on volume measures such as direct labor hours or machine hours to assign overhead costs to products

2
Assign only manufacturing costs to products.

2
Assign all manufacturing costs to products

3
Often use a single plant-wide overhead pool or just one overhead pool per department. Rely solely on volume as the […]

Introduction:

Activity-based costing (ABC) unlike other traditional costing is based on the concept of assigning costs based on the activities that drive costs rather than the volume or number of units produced. It involves analyzing all activities to identify what drive costs, that is, what cause costs to be incurred.
Examples of costs drivers includes like production […]