Activity-based budgeting focuses on estimating the costs of activities rather than the costs of departments and plants.

Question

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Activity-based budgeting is a budgeting approach that focuses on identifying and estimating the costs associated with specific activities or processes rather than the costs of departments and plants. By allocating costs to activities, companies can identify areas where costs can be reduced or eliminated to improve efficiency and profitability.

Activity-Based Budgeting Focuses on Estimating the Costs of Activities Rather