Activity-Based Budgeting

Activity-Based Budgeting (ABB) is a financial planning method that estimates costs based on the specific activities necessary to produce goods or services. Instead of just looking at historical expenses or general categories, ABB identifies each step involved in operations and assigns costs accordingly. This approach provides a more accurate picture of where resources are spent, helping organizations manage costs more effectively and make informed decisions. Essentially, it links expenses directly to the activities that drive them, enabling better control and optimization of resources.