Activity Based Budgeting

Activity Based Budgeting

A way to budget that analyzes potential activities in which a company can engage. These activities are organized according to the company's goals, and the costs of each are organized to compile the budget. ABB contrasts with traditional budgeting, which usually simply increases the previous year's budget to account for inflation and the like; rather, ABB seeks out new opportunities and allocates resources in the budget based on them. Proponents say that ABB is a more accurate way to forecast budgeting.