Activity-based budgeting
A)is a more powerful planning and control tool than a functional-based budget system.
B)starts with sales and production budgets similar to a functional-based budget system.
C)is simpler to construct than a functional-based budget system.
D)Both a and b above are correct.

Question

Quizplus · Accepted Answer

Activity-based budgeting is a more powerful planning and control tool than a functional-based budget system as it focuses on the activities involved in producing goods or services rather than just the functions or departments. It also starts with sales and production budgets, similar to a functional-based budget system. Therefore, both options A and B are correct. Option C is incorrect as activity-based budgeting is often more complex to construct due to the detailed analysis of activities required.

Activity-Based Budgeting