Activity-based Budgeting Research Articles

Does Activity Based Budgeting Matters?

This study aimed to assist AF company in reducing production costs from a financial perspective by employing Activity Based Budgeting (ABB), and to measure its performance by using non-financial perspectives namely operational efficiency, quality and time. The ABB is a tool for determining costs related to activities more accurately, as well as making the planning process more precise and corrections more effective so as to increase the company's competitive advantage. This research is a case study that AF company in Malang as the object. Data was collected by doing observation about the operational and manufacturing process, and analysing financial report year 2022. The results suggested that the company can reduce the selling price due to its lower production costs, thereby making its products more competitive in the market. This should resolve the company's main problem of declining sales. ABB can also improve teamwork among employees, budget design and the elimination of non-value-added activities. One potential benefit of an activity-based budget is that it can provide company with more accurate information regarding costs and resources needed in the work process. This result can be employed as a guideline for carrying out company activities.

Forecasting financial stability in SMEs: A comprehensive analysis of strategic budgeting and revenue management

Small and medium-sized enterprises (SMEs) are vital contributors to global economies, but they often face unique financial challenges that threaten their long-term stability. This review presents a comprehensive analysis of forecasting financial stability in SMEs, focusing on strategic budgeting and revenue management as key pillars. Strategic budgeting plays a crucial role in aligning financial plans with business goals, managing risks, and adapting to market changes. Techniques such as zero-based budgeting, activity-based budgeting, and rolling budgets offer SMEs flexibility in allocating resources and ensuring optimal cash flow management. Meanwhile, effective revenue management involves the use of pricing strategies, sales channel diversification, and customer segmentation to optimize revenue streams and improve profitability. The interplay between strategic budgeting and revenue management is critical for creating dynamic forecasting models that help SMEs anticipate financial challenges and make informed decisions. By integrating both strategies, SMEs can better manage risks, enhance financial predictability, and achieve long-term sustainability. This review also explores the role of technological tools, such as financial software and predictive analytics, in supporting financial decision-making processes. Tools like customer relationship management (CRM) systems and AI-driven forecasting platforms enable SMEs to optimize revenue potential and refine budgetary practices. The review provides recommendations for SMEs to implement best practices in financial planning, suggesting regular budget reviews and proactive revenue management strategies to respond to market fluctuations. By leveraging strategic budgeting and revenue management, SMEs can enhance their financial resilience and improve their capacity to navigate economic uncertainties. The review concludes with insights into emerging trends in financial forecasting, emphasizing the importance of continuous adaptation to maintain financial stability.

Village Waste Management Strategy as an Economic Asset: Accounting Evaluation an Implementation of Sustainable Practices in Bongkasa Village, Abiansemal District, Badung Regency

Bongkasa Village faces significant challenges in waste management, which has become increasingly complex due to population growth, cultural activities, and rising consumption. The Community Service Program (KKN-PMM) aims to evaluate the economic potential of waste management using an accounting approach, enabling efficient and sustainable management of waste. Additionally, this program seeks to empower the local community with knowledge and skills in environmentally friendly and economical waste management practices, contributing to the creation of a clean, healthy, and attractive village environment for eco-tourism development. This service indicates that although the community's knowledge of waste management is fairly good, there are differing views on the burden of waste management. To address this, it is recommended to implement activity-based budgeting that includes budget allocation for facilities, sorting technology, and incentive programs. By making appropriate budget allocations and ensuring good oversight, it is hoped that the efficiency and effectiveness of the waste management program can improve. Furthermore, continuous socialization and education through routine outreach programs are essential to enhance community knowledge, starting from elementary school students about the importance of waste sorting and its benefits for the environment. The support provided must be integrated with budget management to ensure that all aspects of the ongoing program can be optimized, fostering active community participation and improving waste management quality in Bongkasa Village.

Effect of the Management Accounting on the Financial Performance of Small and Medium Enterprises in Rwanda: A Case of Small and Medium Entreprises in Gasabo District

Management accounting provides an excellent opportunity for companies to compete in the market by offering superior products and services at reasonable prices to customers. The general objective of this study was to study the effects of management accounting practices on the Financial Performance of Small and Medium Enterprises in Gasabo district, Rwanda. This study adopted a correlation study design. The target population for this study was the 171 small and medium enterprises in Gasabo district Stratified random sampling method was applied to come up with the sample size, since the population in different Small and Medium Enterprises was considered heterogeneous, implying that a simple random sample is unrepresentative. The study therefore involved 171 Small and Medium Enterprises in Gasabo district. The study collected primary data from the respondents. The data collected was both quantitative and qualitative. Qualitative data is descriptive and non-numerical, while quantitative data is numerical. The study found that Budgeting was the most widely used management accounting practices, including budgeting for planning, activity-based budgeting, flexible analysis, zero-based budgeting, and budgeting for controlling costs. costing systems were the second most widely used management accounting practice, including separation of variable, incremental, and fixed costs; plant-wide overhead rate; activity-based costing; target costing; and cost of quality. Information for decision making was also used by respondents, including stock control models, customer satisfaction analysis reports, product profitability analysis reports, risk analysis reports, and investment analysis reports. Strategic analysis was also highly used by respondents. The study further concludes that the most important elements of management accounting practices amongst the Small and Medium Enterprises in Gasabo district are; the management accounting function identifies key factors that influence Financial Performance and management accounting practices have increased return on equity (ROE), which is a measure of how profitable a company is for its shareholders. This is because management accounting practices help companies to identify and improve risky areas, which can lead to increased profits. This study recommends the creation and enhancement of awareness among firms of the importance of Information for decision making practices as this is the most highly used management accounting practice amongst the Small and Medium Enterprises in Gasabo district. Keywords: Management Accounting Practices, Costing Systems, Budgeting, Information for Decision Making, Strategic Analysis, Financial Performance, Small And Medium Enterprises

Task-Based Budgeting in Environmental Projects Planning: A Case Study of a Manufacturing Company in Poland

In this paper most important differences between performance budgeting and traditional budgeting were presented. The aim of this paper is to focus only on selected differences. The conducted case-study in Poland reveals that activity-based budgeting is an effective method of financial management. Traditional budgeting is implemented according to older concepts. These rules are not compatible with the demands of modern budgeting. Unfortunately, the traditional budgeting method is widely used in public sector in Poland. It is also quite often used in commercial enterprises. The traditional method of budgeting is easier and quicker to implement. Thus, it is popular. On the other hand, it does not allow to achieve positive effects of activity-based budgeting.

PARADOKS BADAI PHK STARTUP: MENCAPAI SUSTAINABILITY DENGAN PENERAPAN AKUNTANSI MANAJEMEN

The potential for startups to grow is not in line with the success of the startup itself. Finance is one of the problems that causes startup failure. This article examines how efforts to achieve sustainability by applying management accounting to find solutions to startup layoffs. The method used is literature study through review of research results, scientific references, online and offline literature. The result of this article is that startups can consider using an Activity Based Budgeting (ABB) approach to be able to prepare better budgets going forward. one of the causes of failure is the mismatch between the products being developed and market needs, so the application of benchmarking can be considered to rise and develop the business. Using ERP software, startups can create efficiency in work and excel in service so that business goals are achieved.

Design of Using Activity Based Budgeting Methods for Controlling Employee Overtime Costs

This study aims to design and propose using overtime budgets in companies. This type of research is descriptive exploratory, and the research object is data related to employee overtime in July-December 2021. The financing method used is time-driven activity-based costing (TDABC). This study suggests that companies follow up on departments with over-capacity status to evaluate employee activities during overtime so that it does not affect company performance. The application of the activity-based budgeting method can increase the effectiveness of employee overtime costs because it can prove that there are savings in overtime costs and can increase profits. So that the ABB method can control the overtime budget more efficiently and better. The ABB method can control employee overtime budgets more efficiently. The ABB method can be proposed to companies to control their employees' overtime costs. This research has implications for identifying the need for overtime, purchasing efficient budget allocations, evaluating the impact on financial companies.

The Role of Integration Between Target Costing and Time-Driven Activity-Based Budgeting Techniques in Managing Time and Cost and its Reflection in Achieving Competitive Advantage

Abstract Traditional cost systems are no longer able to provide the appropriate information in line with the developments and changes of the contemporary and competitive business environments. However, with a vibrant change in the functioning of businesses today, such cost system features have also been replaced to meet the dynamic business environments. If these two techniques are applied in coalition, it is possible for the economic units to manage their time and costs easily, which acts as a competitive advantage for those units. The current research study aims at studying the complementary relationships of these two techniques by applying them in one of the laboratories of General Company for Textile Industries in Hilla, which represents the men’s clothing factory in Najaf. Based on the analytical results, the researchers arrived at several conclusions, while the most important conclusion was the identification of the absence of features to apply the target costing and time-driven activity-based budgeting techniques. The most important recommendation made to the men’s clothing factory in Najaf is the need to pay adequate attention for the application of two techniques to achieve their goals.

Management Accounting Practices in Cooperatives in Nepal

The present research was carried out on management accounting practices in cooperatives in Narayangarh city with the aim to examine the practices of management accounting in cooperatives. The study is based on mainly primary data which were gathered through direct interviews, questionnaires, and focus group discussions. Only eight cooperatives were chosen as samples for the research study using the judgmental method. The research was analyzed with inferential analysis including simple percentages and chi-square test. The research found out the practice of management accounting like capital budgeting, ratio analysis, activity-based budgeting, and break-even analysis is mostly used in cooperatives. Likewise, segregation of cost, cash flow statement analysis, zero-based budgeting, pricing decisions, and responsibility accounting are the least in practice in Nepalese cooperatives. The cause of non-practicing standard costing is not applicable to service industries like the financial sector. In Nepalese cooperatives, hiring an expert from outside to carry out different managerial activities is almost nil. It is concluded that Nepalese Cooperatives are in the initial state with respect to the application of modern managerial accounting tools and yet they are trying to adopt such tools and techniques more and more to cope with the future expected opportunities and challenges to face due to the globalization effect.

Peningkatan performa manajerial melalui budget planning: Literature review

Organizations can be said to be successful if they have good performance. Empirical studies have proven that the creation of good performance is supported by many factors, one of which is budgeted planning. This study found that other factors affecting managerial performance are budget emphasis, budget participation, organizational commitment, differentiation strategy, organizational culture, leadership style, and many others. Based on the classification and type of budget, the budget is divided into several, namely short-term budget, long-term budget, fixed budget, flexible budget, zero-based budget, rolling budget, activity-based budgeting, incremental budgeting, planning, and programming budgeting systems. This literature review provides a contribution of thought that can be a reference for future researchers who want to conduct research and focus on performance with predictors of budget planning. Through this literature review, they can also get information and consider other constructs outside the budget planning construct.

The availability of the elements for applying the activity-based budgeting system (ABB) in the banking sector in order to implement the activity-based management system (ABM) and activity-based budgeting (ABBC)

The availability of the elements for applying the activity-based budgeting system (ABB) in the banking sector in order to implement the activity-based management system (ABM) and activity-based budgeting (ABBC)

The availability of the elements for applying the activity-based budgeting system (ABB) in the banking sector in order to implement the activity-based management system (ABM) and activity-based budgeting (ABBC)

The research aimed to verify the application of the activity-based budgeting system (ABB) in the field of the commercial banking sector because of its great impact on the national economy of Iraq on the one hand, as well as its clear impact on customers and the level of service provision in the banking sector on the other hand. Activity-based budgets (ABB) in banks will facilitate the application of the activity-based management system (ABM) and the activity-based budgeting (ABBC), and the research problem focused on determining the availability of the elements of applying the activity-based budgeting system in order to improve the quality of performance in the field The banking sector, and in order to find solutions to this problem and to achieve the objectives of the research, a questionnaire was designed and distributed to the research sample consisting of (45) employees of a group of commercial banks in Baghdad to conduct statistical analysis using the descriptive statistics tools represented by the arithmetic mean to determine the extent of agreement of the selected sample with Questionnaire questions, and the standard deviation was used to estimate the absolute dispersion of the answers of the sample members from the mean to estimate the relative dispersion, and a picture was drawn for the preferences of the respondents and their general attitudes regarding the variable The results of the research, through the five-point Likert scale, which is an ordinal scale, to conduct statistical analysis according to the (SPSS) program, where it was concluded that the integration between the directions of senior management and the requirements of the application of the ABB system significantly affects the direction of the decision-making process, as well as The research concluded with a set of conclusions, the most important of which is that all the ingredients needed to implement the activity-based budgeting system are actually present in practice, but there are some obstacles that prevent this application, the most important of which are the high costs of application and the practical and technical difficulties related to the analysis of activities and costs. Research adopting the implementation of the activity-based budgeting system in order to improve the quality of performance in the banking sector, as it provides more accurate information that raises the level of planning, control and decision-making.

Analysis Implementation of Activity-Based Budget for Planning and Control of Direct Labor Costs on the Inpatient Department (Case Study at XYZ Hospital)

The research began with a request from the board of directors where researchers working at the hospital asked to prepare a budget based on activities. In addition, the competitive conditions in the hospital industry triggered by various factors require a complete change in the application of management principles in each hospital. Changes in organizational structure, for example, aim to allow flexibility, create a cross-functional team that focuses on patient satisfaction. Changes in human resource management have resulted in performance-based management replacing the function-based management that executives knew and used in the past. This activity-based management requires hospital managers to change the method they use for budgeting, from functional-based budgeting to activity-based budgeting.

DEVELOPMENT OF MANAGEMENT ACCOUNTING IN THE CONTEXT OF STRATEGIC ENTERPRISE MANAGEMENT

The article examines the development of management accounting in the context of information support for strategic enterprise management. Within the framework of the set goal, the essence of management accounting was revealed, the prerequisites for its evolution were revealed in the direction of more functional filling of its tools in accordance with the requests of the management system, with a focus on strategic management accounting. The features of strategic management accounting are determined based on the role of information that is formed in its contour with the aim of providing managers at the operational, tactical and strategic levels to make timely and effective decisions within their competence. It was found that with the change in the information needs of managers in accordance with the goals of modern management concepts (Activity-Based Management (ABM), Value-Based Management (VBM), Risk-Based management), the methodology of management accounting is also developing. The characteristics of strategic management accounting methods are given, in particular: Activity-based Costing (ABC), Activity Based Budgeting (ABB); indicators of EBITDA, marginal EBITDA and NOPAT; methods of assessing the importance of risk. The need for further development of strategic management accounting in the conditions of innovative changes in technologies and management systems is substantiated. Prospects for further research in this direction are the study of the advantages of using a balanced system of indicators as an innovative tool of strategic management accounting.

Quasi-Market Competition in Public Service Provision: User Sorting and Cream-Skimming

Abstract Quasi-markets that introduce choice and competition between public service providers are intended to improve quality and efficiency. This article demonstrates that quasi-market competition may also affect the distribution of users. First, we develop a simple theoretical framework that distinguishes between user sorting and cream-skimming as mechanisms through which quasi-markets may lead to high-ability users becoming more concentrated among one group of providers and low-ability users among a different group. Second, we empirically examine the impact of a nationwide quasi-market policy that introduced choice and activity-based budgeting into Danish public high schools. We exploit variation in the degree of competition that schools were exposed to, based on the concentration of providers within a geographical area. Using a differences-in-differences design—and register data containing the full population of students over a 9-year period (N = 207,394)—we show that the composition of students became more concentrated in terms of intake grade point average after the reform in high-competition areas relative to low-competition areas. These responses in high-competition regions appear to be driven both by changes in user sorting on the demand side and by cream-skimming behavior among public providers on the supply side.

БЮДЖЕТУВАННЯ В СИСТЕМІ ОБЛІКОВО-АНАЛІТИЧНОГО ЗАБЕЗПЕЧЕННЯ ІННОВАЦІЙНОГО РОЗВИТКУ ПІДПРИЄМСТВ

The article is devoted to the necessity of development and management of innovative activity of the subject of entrepreneurial activity, using accounting and analytical support, the basic components of which are management accounting and budgeting process in order to make management decisions to increase the efficiency and effectiveness of the enterprise during the strengthening of intellectual capital. Trends of innovative development in the conditions of distribution of information and communication technologies are defined. As a result of theoretical research, the essence of budgeting concepts and budget modeling options is determined, which are aimed at reducing costs, lossless production and have an adaptive nature to the management accounting system of domestic enterprises. The essence of the concepts of budgeting (kaizen-budgeting, activity-based budgeting (ABB), process-oriented budgeting (PBB), budgeting based on the driver system (DBB-method), off-budgeting (BB)) is studied. Their spread is observed mainly in foreign countries. The organizational aspects of the implementation of budgeting of innovation development processes are considered. The internal and external factors influencing the construction of this process, the prerequisites for drawing up generally accepted budget formats, including the processes of innovation development are identified. It is proposed to include in the budgets of the process of innovation development target financial indicators for: income from the sale of innovative products (works, services of innovative nature), costs of investments in innovative objects of non-current assets, costs of production of innovative products, costs not subject to capitalization, and costs of organizational and managerial innovations for sales. The organizational model of budgeting the process of innovation development, which, unlike others, includes a list of specific operating budgets and provides the ability to control the implementation of targets, optimize innovation costs, strengthen employee motivation, strengthen communication in the accountability system and provide feedback for budget changes is developed and proposed for use in the practice of enterprise.

Implementation of Activity-Based Costing and Activity-Based Variance Analysis in Food Industry

Activity based costing assings overheads to products with convenient drivers and makes costs of products visible on activities level. Activity based variance analysis approaches reveals variances on product and activity level. Activity Based Costing and Activitiy based variance analysis are tools methods for continuous improvement and cost management. Study aims to apply activity-based costing and activity-based variance analysis in food industry. First stage covers observation and data collection period. Implementation preiod starts with activity-based budgeting process. Than, overheads assigned to products following activity-based costing steps than using activity-based variance analysis approaches variances are calculated. Activity-based costing implementation results provided evidence that overheads consist important part of food costs. Activity-based variance analysis results revealed that variances on activity and product level.

Cost analysis and economic optimization of small-scale dairy production systems in Mexico

Accounting and mathematical modeling methods were combined to analyze the cost structure and economic optimization of small-scale dairy production systems in the present study. Information on the technical, economic, and production characteristics of 72 farms was obtained over a two-year period. Four strata of farms were defined using a random stratified sampling design with proportional allocation. To evaluate production costs, two accounting methods were used: (1) the activity-based budgeting (AB) method, which counted the actual cost of feed cultivation and family labor (FL) as a percentage of total feed and labor costs for each stratum, and (2) the standard accounting (SA) method, which estimated production costs according to the cost of purchasing 100% of feed and hiring 100% of labor. Based on the results of the AB method, four scenarios were developed and adapted to a mixed integer linear programming model to predict the percentage of feed cultivation and FL that maximizes economic benefits. The base scenario evaluated the actual percentages of feed cultivation and FL employed by each farm category, and scenarios I, II, and III simulated the purchase of feed and hire of labor at 20%, 50%, and 100%, respectively. The results showed that 100% dependence on the purchase of feed and hire of labor increases the daily production cost by 20% compared to the base scenario in the four evaluated strata. The mathematical model indicated that the production of less than 90% of feed and use of less than 80% family labor significantly decrease the income in each analyzed stratum. Accordingly, production under the simulated conditions of scenarios I, II, and III is economically and financially non-viable.

Management Accounting Practices among Vietnamese Small and Medium Enterprises

This paper investigated the level of management accounting application in Vietnamese enterprises in relation to the management functions of planning, controlling, assessing and decision making. Both qualitative and quantitative research methods were used. Qualitative research was conducted with 23 directors and chief accountants. Quantitative research was conducted by sending questionnaires to 120 enterprises. The results showed that 100 percent of Vietnamese enterprises have been applying management accounting. The level and content of management accounting applications in enterprises varied by size, length of business operation and business sector. Small companies often applied conventional management accounting techniques while large ones used contemporary management accounting techniques such as activity-based costing, activity-based budgeting, analysis for decision making, target costing and strategic planning. The research provides an overview of the reality, effects of management accounting on enterprises, helping enterprises understand management accounting and ways to use it effectively in the future.

ABC implementation in the Nelson Mandela Bay Metropole: How far should manufacturing organisations go?

Activity-based costing (ABC) success factors have been studied in past research, mostly by using commonly known success factors. In this qualitative study, a literature review and interviews were used to establish what factors are responsible for the successful implementation of ABC. The number of semi-structured interviews was limited to 13 ABC adopters in the Nelson Mandela Bay Metropole. The findings suggested that ABC can be enhanced with the use of activity-based budgeting (ABB) and activity-based management (ABM). In addition, the use of ABC in conjunction with capital investment decisions may ensure that correct decisions are made when critical long-term projects are considered. Extensive identification of cost drivers is beneficial to the extent where the product loses its relationship with the overhead cost. It is evident from this research that considering fixed indirect overheads in ABC is not always beneficial for a manufacturing organisation unless there is a clear link to the end-product.