What is it?
Practice
CIMA Official Terminology describes activity-based budgeting (ABB) as a method of budgeting based on an activity framework, using cost driver data in the budget setting and variance feedback processes.
The most basic form of ABB uses cost drivers (identified through activity-based costing, ABC) to help derive budgets. As its name suggests, ABB focuses on activities rather than functions.
In simple terms, ABB follows three stages:
1. Identify activities and their cost drivers
2. Forecast the