Activity-Based Budgets

question 128

Multiple Choice

Activity-based budgets

• A)use the knowledge of cost behavior to split the functional-based line items into fixed and variable components.
• B)start with output and then determine the resources necessary to create that output.
• C)rely on the use of functional-based line items.
• D)work in environments where the products are homogenous and the production process is simple.

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Definitions:

Differentiation Strategy

A company that uses a differentiation strategy attempts to develop an image or reputation for its product or service that sets the company apart from its competitors.

Diversification Strategy

A business approach where a company broadens its range of products or markets to reduce risk and increase potential for growth.

Corporate Strategies

High-level plans or frameworks developed by businesses to achieve their long-term objectives and to secure a competitive position in the market.

Retrenchment Strategy

A business strategy used to reduce the scale or scope of a company's operations to improve financial stability during tough times.