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Chapter 1

Activity Based Budgeting (ABB)

Activity-Based Budgeting is ‘a method of budgeting based on an activity
framework and utilising cost driver data in the budget setting and
variance feedback processes’.

Budgets are set for each activity using costs determined via ABC.

 Best when overheads are  Expensive
significant
 Only useful if using ABC
 Very useful in TQM environments

 Cost control and cost cutting are
easier

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