Research On Activity-Based Budgeting

Budgeting plays the key role in the enterprise's control systerm due to its function of planning,orgnaization,coodrination,control,motivation and evaluation.Budgeting is widely applied in western countries and also recongized and put into practice in our county step by step.However, with the change of management enviroment in modern enterprises, the management concept is tending to operation and development. Traditional budgeting, which focuses on the products and financial target, can't meet the requirements of management in new area. It is essential to put the idea of"activity"into budget to closely contact enterprise strategy and operation management. It will be beneficial to achieve the effective connections among budgeting, strategy goal and the costs.ABB was compared with traditional budgeting on the basis of analyzing the limitations of traditional budget, which is gradually disadvantageous for modern enterprises because of its mere focus on aggregate financial result. On the other hand, ABB can provide detailed activity information for the operation management because it successfully integrates process, strategy with management.The principle of ABB's compilation, compliling steps of single process and design thoughtfulness of ABB's complilation was put forward and detailedly analyzed in this paper. The variance analysis of budgeting result was also discussed. The paper circumstantiated the method on how to apply ABB to achieve the coherence of management process and enterprise strategy.