Activity-Based Budgeting Is a Budget System Based on Expected Activities

question 53

True/False

Activity-based budgeting is a budget system based on expected activities and their activity levels, which helps management plan for the resources required.

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Definitions:

Maintenance Cost

Expenses incurred in the regular upkeep and repair of equipment, buildings, or machinery to ensure efficient operation and prevent breakdowns.

Contribution Margin

The difference between the sales revenue of a product and its variable costs, used to cover fixed costs and generate profit.

Sales Revenues

The total amount of money generated from sales of goods or services before any expenses are subtracted.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and packaging.