Question

Choose the description that tells how​ nonoutput-based cost drivers can be incorporated into budgeting. A.​Activity-based budgeting​ (ABB) focuses on the budgeted cost of activities necessary to produce and sell products and services.​ Nonoutput-based cost​ drivers, such as the number of part​ numbers, number of​ batches, and number of new products can be used with ABB. This is the correct answer. B.​Activity-based costing​ (ABC) refines a budgeting system by identifying individual activities as the fundamental cost objects. An activity is an​ event, task, or unit of work with a specified purposelong dash—for ​example, designing​ products, setting up​ machines, operating​ machines, and distributing products. C. Responsibility accounting is a system that measures the​ plans, budgets,​ actions, and actual results of each responsibility​ nonoutput-based cost driver. D. Kaizen budgeting explicitly incorporates the use of​ nonoutput-based cost drivers into the budget numbers based on the idea that it is possible to continuously reduce costs over time.

Answer 1

Nonoutput-based cost drivers can be incorporated into budgeting through methods such as Activity-based Budgeting (ABB), Activity-based Costing (ABC), Responsibility Accounting, and Kaizen Budgeting. Each method involves a unique approach to handling costs and budgeting related to the production and sale of goods and services.

Step-by-step explanation:

Incorporating nonoutput-based cost drivers into budgeting can be executed through various methods such as Activity-based Budgeting (ABB), Activity-based Costing (ABC), Responsibility Accounting, and Kaizen Budgeting. Let's take each method:

1. Activity-based Budgeting (ABB): In ABB, the focus is on the budgeted cost of activities that are needed to produce and sell products and services. Things like the number of part numbers, the number of batches, and the number of new products are examples of nonoutput-based cost drivers that can be used in ABB.
2. Activity-based Costing (ABC): ABC refines a budgeting system by recognizing individual activities as the root cost objects. An activity ties to a specific purpose -- such as designing products, operating machines, or distributing products etc.
3. Responsibility Accounting: This method measures the plans, budgets, actions, and actual results of each responsibility center or nonoutput-based cost driver, assisting management in monitoring and control.
4. Kaizen Budgeting: This sort of budgeting incorporates nonoutput-based cost drivers into the budget numbers. This is based on the theory that it's feasible to continually lower cost figures over time.

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