Definition
Activity-Based Budgeting is a budgeting approach that allocates resources based on the costs of activities required to produce goods or services, emphasizing the relationship between resources and organizational goals.
Related Services
ABB is widely used in managerial accounting, operational planning, and performance analysis. It supports industries in cost control, efficiency improvements, and strategic planning.
Problem and Application
Implementing ABB can be resource-intensive and complex, requiring detailed activity tracking and cost allocation. However, it provides businesses with a clearer understanding of cost drivers, enabling better decision-making and resource allocation.
Conclusion
Activity-Based Budgeting offers an accurate and strategic method of financial planning. Despite its complexity, it is highly effective in aligning budgets with organizational objectives and improving cost efficiency.
