Activity-based budgeting - abb, Financial Management

Assignment Help:

It is a method of budgeting in which the actions that incur costs in every functional area of a company are recorded and their relationships are defined and evaluated. Activities are then combined with strategic goals, following which the costs of the activities required are used to develop the budget.  


Activity based budgeting stands contrary to traditional, cost-based budgeting practices in which a previous period's budget is merely adjusted to account for inflation or revenue growth. As such, ABB gives opportunities to align actions with objectives, streamline costs and enhance business practices.  

By viewing at the cost structure of an organization through the processes that are really being performed, managers can more efficiently evaluate the profit potential of a company's products and services. Cost efficiencies can be created by comparing activities done in different areas of the organization and consolidating or rerouting some functions.  

At its essence, activity-based budgeting starts by looking at outcomes and the activities that produced them, as opposite to cost-based budgeting, which generally begins with raw input and material and works external. ABB can assist firms to create more precise financial forecasts as well.

 


Related Discussions:- Activity-based budgeting - abb

Profit and loss statement, Profit and Loss statement:   The Profit and L...

Profit and Loss statement:   The Profit and Loss statement is the primary measure of business performance.  As the name suggests, this particular report measure whether the b

Observation of capital structure, Q. Observation of capital structure? ...

Q. Observation of capital structure? Droxfol Co has long-term funding provided by ordinary shares preference shares and loan notes. The rate of return necessary by each source

Global equity indexes, Global Equity Indexes: As described earlier in t...

Global Equity Indexes: As described earlier in this chapter, there are several stock market indexes available which depict the performance of particular sectors and a country a

Enumerate the internal development of any business, Enumerate the Internal ...

Enumerate the Internal development of any business or 'organic growth' Business grows using its own internal resources. - Reduces risk of the high cost of integrating cultur

Illustrate the capital markets in maturity of the securities, Illustrate th...

Illustrate the capital markets in maturity of the securities? On the basis of the maturity of the securities traded, capital markets can be introduced here: Capital markets

Risk of default influence the rate of interest, Q. Risk of default influenc...

Q. Risk of default influence the rate of interest? The bank offering the loan to Blin will make an assessment of the risk that the company might default on its loan commitments

Determine the symptoms of overtrading, Determine the Symptoms of overtradin...

Determine the Symptoms of overtrading Symptoms of overtrading are:- Fast sales growth Increasing trade payables Increasing trade receivables Fall in cash ba

Price of equity shares, please give us the formula of price of equity share...

please give us the formula of price of equity shares of walter''s and gordon''s model

Securities, Calculate the expected rate of return and risk of return

Calculate the expected rate of return and risk of return

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd