Activity based budgeting:
A) Is the same as traditional budgeting
B) Separates cost into fixed and variable categories
C) Uses more cost pools and cost drivers to determine forecasted costs
D) Is similar to zero-based budgeting

Question

Quizplus · Accepted Answer

Activity based budgeting is different from traditional budgeting as it uses more cost pools and cost drivers to determine forecasted costs. It helps to identify the cost associated with each activity performed and allocate the resources accordingly. It does not separate costs into fixed and variable categories (choice B) nor is it similar to zero-based budgeting (choice D).

Activity Based Budgeting