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Activity-based budgeting allocates cost to:
AActivities driving cost
BCost centres only
CProducts only
DAuditors
Answer & Solution
Correct answer: A. Activities driving cost
1. Activity-based budgeting (ABB) identifies the activities that drive cost.
2. It then budgets resources for each activity based on its expected volume.
3. This contrasts with departmental allocation based on last year's split.
4. Hence ABB allocates cost to activities driving cost.
_Source: ICAI BoS Inter Paper 3, Ch 15 "Budget", §15.8.6 ¶2_
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