• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

Activity based budgeting and beyond budgeting

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Activity based budgeting and beyond budgeting

  • This topic has 5 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • November 10, 2021 at 9:44 am #640345
    Syed Ahsan Ali
    Participant
    • Topics: 111
    • Replies: 69
    • ☆☆

    What is activity-based budgeting and beyond budgeting?

    I have problem understanding how they work and how they are applied.

    Can we be asked about them in the exam as a theory?

    November 10, 2021 at 4:27 pm #640372
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51579
    • ☆☆☆☆☆

    They are both explained in my free lectures on budgeting (and they can only be asked in discursive questions, not as calculation questions).

    November 10, 2021 at 6:44 pm #640387
    Syed Ahsan Ali
    Participant
    • Topics: 111
    • Replies: 69
    • ☆☆

    Traditionally we measure the performance of the managers based on budgets prepared at the beginning of the period.

    However, with beyond budgeting approach measures the performance of the managers based on comparing the performance of the managers with other similar companies (or similar divisions of the same company). The reason is that companies prefer this approach that measures the performance of the managers to compete with industry standards that help meet the customer’s perspective.

    I have a question here that manager’s performance are compared with similar companies manager’s performance or similar companies’ budgets?

    Please correct me what I have written above and I could not find activity-based budget in your lectures. Please do state what it is and why we should prefer it over other budgeting.

    November 11, 2021 at 7:31 am #640404
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51579
    • ☆☆☆☆☆

    It should be compared with the actual performance of similar companies managers, not with their budgets.

    Activity based budgeting applied ABC techniques and budgets for each activity.

    November 11, 2021 at 8:52 am #640410
    Syed Ahsan Ali
    Participant
    • Topics: 111
    • Replies: 69
    • ☆☆

    You didn’t say what I said above about beyond budgeting was correct or not?

    You mean to say that beyond budgeting is an advanced technique without making any budget at all rather the comparison is with similar companies manager’s performance so we can say that the budget is actually the similar companies manager’s performance as a base to perform to this level. But how do we obtain similar companies manager’s performance so that we can compare our manager’s performance with it?

    Activity based budgeting is a budgeting method in which budgets are prepared using Activity Based Costing after considering the overhead costs. In simple words, activity based budgeting is management accounting tool which does not consider the past year’s budget to arrive at current year’s budget. Instead, the activities that incur the cost are deeply analyzed and researched. Based on the outcome of the study, the resources are allocated to an activity.

    It is concerned with the allocation of fixed costs (ie. overheads) which focuses on understanding how overheads are consumed by the production process.

    Is that all correct? Thanks for your time I appreciate your help 🙂 🙂

    November 11, 2021 at 3:46 pm #640429
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51579
    • ☆☆☆☆☆

    What you wrote was correct.

    As I do say in my lectures it is not always obviously possible to find out the performance of managers in similar companies. Certainly if we have similar divisions within the same company we can do it. As far as other companies are concerned it can benefit both companies if they agree to share certain information about performance.

    What you have written about activity based costing is fine.

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • John Moffat on PM Chapter 13 Questions Standard Costing and Basic Variance Analysis
  • abdallah254 on FA Chapter 2 Questions The Statement of Financial Position and Statement of Profit or Loss
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy