How does activity-based budgeting differ from traditional budgeting methods?
- Based solely on historical data
- Doesn't consider resource allocation
- Focuses on estimating costs associated with specific activities
- Utilizes a top-down approach
Activity-based budgeting focuses on estimating costs associated with specific activities, allowing for more accurate budgeting by aligning resources with activities. Traditional budgeting methods often rely on historical data and may not allocate resources optimally for various activities.
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