Activity-based budgeting ________.
A) uses one cost driver such as direct labor-hours
B) uses only output-based cost drivers such as units sold
C) focuses on activities necessary to produce and sell products and services
D) classifies costs by functional area within the value chain

Question

Quizplus · Accepted Answer

Activity-based budgeting focuses on identifying the activities necessary to produce and sell products and services, and then assigning costs to those activities based on their consumption of resources. It does not rely on a single cost driver like direct labor-hours or output-based cost drivers like units sold, nor does it classify costs by functional area within the value chain.

Activity-Based Budgeting ________