ACTIVITY-BASED BUDGETING: THE ESSENCE, ADVANTAGES, DISADVANTAGES

Abstract. The article reflects the results of a study conducted to identify benefits, as well as problems that impede the use in practice of Russian companies of the methodology of budgeting in activity (АВВ-Activity-based budgeting). The relevance of the research topic is determined by the need to increase the efficiency of corporate governance structures, increase its transparency for top-management and beneficiaries, in order to respond flexibly to the challenges of the external environment. The article shows that the budgeting methodology of Activity-based budgeting corresponds to the strategic goals of the company and is logically connected with them, as it reveals the role of each business process in achieving them. The author emphasizes that, unlike ABC budgeting (Аctivity-bаsеd cоsting), where the number of resources is determined directly from the predicted sales of goods and services, ABB uses sales forecasts to evaluate the necessary processes, which, in turn, determine the necessary resources. In addition, attention is focused on the key role of indirect cost planning in the Activity-based budgeting, which increases the degree of control by management. There is an increase in efficiency from the application of the methodology, since its implementation involves the consolidation of responsible persons for certain areas of the company’s activities. The stages of the implementation of Activity based budgeting and Аctivity bаsеd cоsting are provided. The sequence of introducing ABC and ABB budgeting is explained, as well as comments are given regarding the type of enterprises in which the application of the method is recommended. The advantages of Activity based budgeting are highlighted in the article, the problems that hinder the use of ABB in Russian practice are identified.

АВВ, Activity based budget, Аctivity bаsеd cоsting, budgeting in activity, traditional approach, costs, indirect cost planning, control, business processes, budget period.

Klevanets V. S., Larionova A. A. Activity-based budgeting: the essence, advantages, disadvantages. Business. Education. Law, 2020, no. 2, pp. 188–193. DOI: 10.25683/VOLBI.2020.51.257.