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Definition of Activity-based budgeting
A method of budgeting that develops budgets based on expected activities and cost drivers – see also activity-based costing.
planning approach applying activity drivers to estimate the levels and costs of activities necessary to provide the budgeted quantity and
a repetitive action performed in fulfillment of business functions
the process of detailing the various repetitive actions that are performed in making a product or
A method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers.
A relatively new method advocated for the
a process using multiple cost drivers to predict and allocate costs to products and services;
A cost allocation system that compiles costs and assigns
a discipline that focuses on the activities incurred during the production/performance process as the way to improve the value received
a segment of the production or service
a measure of the demands on activities and,
hours, machine hours or volume of production
Ratios that measure how effectively the firm is managing its assets.
Methods of financing in which lenders and equity investors look principally to the
Loans granted usually by a financial institution where the asset being financed constitutes the sole security given to the lender.
an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute
the process of formalizing plans and committing
an activity that is necessary for the operation of the business but for which a customer would not want to pay
The process of choosing the firm's long-term capital assets.
Refers generally to analysis procedures for ranking
The process of ranking and selecting investment alternatives and
a process of evaluating an entity’s proposed
The series of steps one follows when justifying the decision to purchase
capital budgeting decision
Decision as to which real assets the firm should acquire.
a process in which there is a rolling
Life insurance or annuity product in which the cash value and benefit level fluctuate according to the performance of an equity portfolio.
non-value-added (NVA) activity
an activity that increases the time spent on a product or service but that does not increase its worth or value to the customer
Planning, programming and budgeting system (PPBS)
A method of budgeting in which budgets are allocated to projects or programmes rather than to responsibility centres.
A budget that allocates funds in line with strategies.
an approach to budgeting that relates
value-added (VA) activity
an activity that increases the worth of the product or service to the customer
A variety of approaches that emphasize increasing shareholder value as the primary goal of every business.
a comprehensive budgeting process
A method of budgeting that ignores historical budgetary allocations and identifies the costs that are necessary to implement agreed strategies.
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