Activity-based budgets
A)use the knowledge of cost behavior to split the functional-based line items into fixed and variable components.
B)start with output and then determine the resources necessary to create that output.
C)rely on the use of functional-based line items.
D)work in environments where the products are homogenous and the production process is simple.

Question

Quizplus · Accepted Answer

Activity-based budgets start with the desired output and then determine the resources necessary to create that output. This approach considers the different activities that need to be performed and their associated costs, which allows for a more accurate budgeting process. This method is particularly useful in complex production processes where different activities have different cost drivers.

Activity-Based Budgets