Activity Based Budgeting

Posted in Finance, Accounting and Economics Terms, Total Reads: 1777

Definition: Activity Based Budgeting

Activity based budgeting is in contrast to the traditional system in which costs are allocated to each of the inputs and then budgeted whereas in activity based budgeting, cost is allocated to each of the activities performed to produce the finished product.

The final product targets are then aligned to the company’s strategic goals and accordingly the activities are budgeted for the same.

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