Activity-based budgeting provides better decision-making information than budgeting based solely on output-based cost drivers (units produced,units sold,or revenues).

Question

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Activity-based budgeting takes into account the cost drivers and activities that directly contribute to the production of goods or services. This provides a more detailed and accurate understanding of costs and resource allocation, allowing for better decision-making. Budgeting based solely on output-based cost drivers may not consider other factors that impact costs, such as overhead expenses or process inefficiencies, and can lead to inaccurate budgeting and poor decision-making.

Activity-Based Budgeting Provides Better Decision-Making Information Than Budgeting Based Solely