Dictionary of Accounting Terms: activity-based budgeting (ABB)
activity-based budgeting (ABB)
approach to budgeting that involves quantitative expression of the activities/business processes of the organization reflecting forecasts of workload (quantity of drivers) and other financial requirements to achieve strategic goals or planned changes to improve performance. Activity-based budgeting provides greater detail, especially regarding overhead, because it permits the identification of value-adding activities and their drivers. After operations, it is useful for comparing actual costing rates and driver usage with the amounts budgeted.
