What is a disadvantage of the "One Size Fits All" allocation method?

The "One Size Fits All" allocation method often necessitates the distribution of fixed overhead costs uniformly across all products or services without considering the unique characteristics or specific consumption patterns of individual products. This blanket approach can force costs onto products that may not accurately represent their actual utilization of resources, leading to misallocated overhead.

In many cases, some products may require more resources than others, or they may utilize resources differently, rendering this allocation method inefficient. The inherent assumption that all products absorb costs in the same manner can distort the financial performance of those products, leading to potential mispricing and poor decision-making in profitability analysis. This can ultimately affect inventory valuation and financial reporting, as the overhead costs attributed to various products may not truly reflect their economic reality.

While the other answer choices highlight certain aspects of cost allocation, they do not capture the core issue of resource misrepresentation that arises from the "One Size Fits All" approach.