Which of the Following Is a Weakness of Activity-Based Budgeting

question 3

Multiple Choice

Which of the following is a weakness of activity-based budgeting?

• A) Budget allocations are independent of work performed
• B) Institutionalizes past spending patterns
• C) Requires voluminous data to create
• D) Does not encourage efficiency
• E) Allocation of overhead costs

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Definitions:

Unlevered Cost

The cost of financing a project or investment without any debt, reflecting the expenses incurred using only equity financing.

Weighted Average

A weighted average is a calculation that takes into account the varying degrees of importance of the numbers in a data set, providing a measure that reflects their contribution to the overall total.

Coupon

The interest rate stated on a bond when issued, which is typically paid at regular intervals until maturity.

Dividend Payout

The portion of net income a firm pays out to its shareholders as dividends.