What are the Disadvantage of overhead rate method?

The overhead rate method can lead to inaccuracies in product costing, as it often relies on estimates that may not reflect actual resource consumption. This can result in over- or under-absorption of overhead costs, distorting profitability analysis. Additionally, it may not account for fluctuations in production levels or changes in cost structures, making it less adaptable to dynamic business environments. Lastly, the method can oversimplify complex manufacturing processes, potentially misrepresenting the true cost of production.